On December 21, 2007 the Securities and Exchange Commission posted to its website the final release adopting proposed amendments (the Final Rules) regarding the acceptance in SEC filings by foreign private issuers of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) without reconciliation to U.S. Generally Accepted Accounting Principles (GAAP). The rule amendments were approved by the SEC on November 15, 2007. 

In summary, the Final Rules provide that:

  • Foreign private issuers may file financial statements prepared in accordance with IFRS as issued by the IASB without reconciliation to GAAP, provided that such foreign private issuers (i) state explicitly in the notes to their financial statements that such financial statement are in compliance with IFRS as issued by the IASB and (ii) provide an unqualified auditor’s report that opines on that compliance;
  •  Foreign private issuers may also file financial statements for required interim periods without reconciliation to GAAP if the interim financial statements are prepared in accordance with IFRS as issued by the IASB; and 
  • The accommodation contained in General Instruction G of Form 20-F to all first time adopters of IFRS allowing them to file two years rather than three years of financial statements with appropriate related disclosure in the registration statement or annual report filed with the SEC is extended indefinitely.

The Final Rules make conforming amendments to Rules 1-02, 3-10 and 4-01 of Regulation S-X, Securities Act Forms F-4 and S-4, and Securities Act Rule 701. Existing requirements for reconciliation to GAAP will not change for foreign issuers that file financial statements with the SEC using a basis of accounting other than IFRS as issued by the IASB.

The Final Rules will apply to financial statements for financial years ending after November 15, 2007 and interim periods within those years contained in filings made after the effective date of the Final Rules.

The amendments to General Instruction G of Form 20-F relating to first-time adopters of IFRS are applicable to filings made after the effective date of the Final Rules.

The effective date for the Final Rules will be 60 days after publication in the Federal Register.  http://www.sec.gov/rules/final/2007/33-8879.pdf