The Securities and Exchange Commission has proposed a roadmap for the use of financial statements prepared in accordance with International Financing Reporting Standards (IFRS) in connection with SEC filings by public companies.

The proposed roadmap addresses the basis for considering the mandatory use of IFRS by U.S. issuers, setting forth seven milestones which, if achieved, could lead to the mandatory use of IFRS by U.S. issuers in their filings with the SEC. These milestones include improvements in accounting standards, accountability and funding of the IASC Foundation (which oversees the major standard-setter for IFRS), improvement in the ability to use interactive data for IFRS reporting, and education and training relating to IFRS. In 2011 the SEC would determine whether to proceed with rulemaking to require that U.S. issuers use IFRS beginning in 2014 based upon an evaluation of the progress with respect to these milestones at that time.

The SEC has long expressed its support for a single set of high-quality global accounting standards as an important means of enhancing the comparability of U.S. companies with that of non-U.S. companies. In the view of the SEC, the increasing acceptance and use of IFRS in major capital markets throughout the world over the past several years, and their anticipated use in other countries in the near future, indicate that IFRS have the potential to become the set of accounting standards that best provide a common platform for company financial reporting. Approximately 113 countries around the world currently require or permit IFRS reporting for domestic, listed companies.

The SEC also proposed to permit early use of IFRS by a limited number of large U.S. issuers whose industries worldwide use IFRS as the basis of financial reporting more than any other set of standards, beginning with filings in 2010. This would require amendments to various regulations, rules and forms that would permit early use of IFRS. The SEC has proposed such amendments, believing that in these circumstances the use of IFRS would enhance the comparability of financial information to investors. The SEC estimates that approximately 110 U.S. issuers would be eligible. The SEC has proposed two alternatives with respect to the disclosure of U.S. Generally Accepted Accounting Principles (GAAP) information by U.S. issuers that qualify to elect to use IFRS financial statements in their SEC filings beginning in 2010. Under the first proposal, U.S. issuers would provide a one-time reconciliation from certain U.S. GAAP financial statements to IFRS. Under the second proposal, U.S. issuers would provide, on an annual basis, a reconciliation from IFRS financial statements to U.S. GAAP covering a threeyear period. The SEC is soliciting comment on these alternative proposals to assist with assessing whether a one-time reconciliation in accordance with IFRS is sufficient or whether the ongoing disclosure of supplemental U.S. GAAP financial information by U.S. issuers that have elected to file IFRS financial statements should also be required.

The comment period on these proposals will end 90 days following publication in the Federal Register.