SEC set to eliminate reconciliation requirement

By Emily Chasan

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is set to vote this week to drop the requirement foreign companies listed in the United States reconcile their financials to U.S. accounting rules, a top U.S. regulator said on Tuesday.

John White, head of the division of corporate finance at the SEC, said he was confident the commission would vote on Thursday to eliminate the reconciliation requirement for companies that file reports in International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standards Board (IASB).

"That is a step toward our ultimate goal of a single set of high quality standards," White said at a Financial Executives International Conference in New York. "We want to get to a single set as rapidly as we can, but we do believe this interim step of having two sets of co-existing standards is a step to getting there."

In June, the SEC proposed allowing foreign public companies to choose between international accounting standards or U.S. rules when filing reports with the agency and after a public comment period, the commissioners are set to vote officially on the topic on Thursday.

The commissioners are expected to vote on a time table for lifting the requirement and to vote for accepting only the IASB's version of IFRS, White said.

"We're not looking to accept a jurisdictional version of IFRS," he said. "The issuer will have to unreservedly and explicitly state, and their auditors as well, that they are using the IASB version."

That has been a point of contention as many of the 100 countries that have adopted IFRS have carved out special exemptions and amendments.

In the European Union, for example, an IFRS amendment allows banks to continue to hedge against interest rate changes and reduce the number of complex financial instruments such as rate swaps that firms must value at market rates. That would be blocked under full IFRS.