Securities & Exchange Commission Staff Paper

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Category: Business and Industry

Date Submitted: 11/14/2012 10:15 AM

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Summary of SEC Staff Paper

The November 16, 2011, Securities and Exchange Commission staff paper was meant to be a summary of results stemming from an analysis that was conducted to address the similarities and differences between the language of U.S. GAAP and IFRS. The analysis is only one small component of the ‘Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers’ that was developed by the staff of the SEC’s Office of the Chief Accountant as well as other offices of the U.S Securities and Exchange Commission. According to the SEC, “the purpose of the work plan is to consider specific areas and factors relevant to a Commission determination as to whether, when, and how the current financial reporting system for U.S. issuers should be transitioned to a system incorporating International Financial Reporting Standards (“IFRS”).” The Work Plan is divided into six areas, with the first area being the focus of the November SEC staff paper. The SEC staff used components that contribute to financial information usefulness, to analyze the quality of IFRS text in comparison to U.S. GAAP text. The comparative approach was used as a basis in determining the quality of IFRS text, because the SEC staff believes that the text used in current U.S. GAAP standards produces high-quality information that is useful and helpful for end financial users. The staff views U.S. GAAP standards as high-quality, because the SEC recognizes them as generally accepted for purposes of establishing federal laws. There is also an abundance of information, examples and specific guidance that comprises U.S. GAAP, resulting in a more consistent application of standards across entities. This is because U.S. GAAP was developed by many standard setters, unlike IFRS which has been developed by a single standard setter with only one interpretative body. The main portion of the staff paper...