Carve-Ins, Not Carve-Outs, Can Help IFRS Adoption, Investor Panel Tells SEC

A panel of investors, speaking at an SEC roundtable on International Financial Reporting Standards earlier today, told SEC Chairman Mary L. Schapiro, Commissioner Elisse Walter, and SEC staff present that 'carve-ins' (or requiring additional or alternative information to that required by IFRS) - vs. 'carve-outs' (in which a country opts out of all or a portion of a particular IFRS standard) can be helpful if the SEC were to move to adopt IFRS.

Carve-Ins, Not Carve-Outs
Mark LaMonte, managing director, Moody's Investor Service, told the group, "Carve-outs are not particularly helpful; carve-ins can be. FASB needs to understand where U.S. views [differ] … maybe you have carve-ins [such as] incremental disclosures, or alternative presentations, we still make sure we adopt the standards in a way that allows those global comparisons to take place."

David Larsen, Managing Director, Duff & Phelps noted he supported what has informally been described as a 'condorsement' approach to adopting IFRS in the U.S., as outlined in a May 27 SEC staff paper on the incorporation of IFRS into the U.S. financial reporting system. Under the 'condorsement' approach, the FASB would have a continuing role in participating in the development of IFRS, and in serving as the 'endorsement' mechanism in the U.S., to approve standards for adoption in the U.S., or develop modifications for U.S. adoption, as needed.

Private vs. Public Cos; Another Y2K?; Political Pressure; Will Investors Be Ready?

Other matters discussed by the investor panel included private vs. public company considerations, whether Y2K prep served as an apt model for a potential transition to IFRS, issues regarding political pressure on the IASB, and issues regarding investor preparedness (both investors and analysts, often used as a proxy for investors) and how companies can help their investors get ready. You can view the archived webcast of the roundable; read additional highlights from the roundtable.

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FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI

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