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Cox said the changes are on track to begin in 2009 and don't depend on eradicating differences between U.S. generally accepted accounting principles, or GAAP, and international financial reporting standards. He spoke Tuesday at an SEC public meeting on paving the way for the U.S. to accept non-U.S. accounting from foreign companies.
Currently, foreign companies that list shares for trading in the U.S. must convert their financial results to conform to U.S. GAAP. Eliminating that requirement will allow overseas companies to choose which standard to use, and Cox said that could make it far less costly for companies to list shares in U.S. markets.
New York Stock Exchange President Catherine Kinney predicted more foreign companies would list their shares for trading in the U.S. if they no longer have to reconcile financial results to U.S. accounting. Kinney urged U.S. regulators to consider testing the idea even sooner than 2009 and be open to allowing use of international accounting standards by American companies in the U.S.
'Do what you can, as soon as possible,' Brooklyn Law School professor Roberta Karmel advised the SEC.
European regulators eventually may require U.S. companies to reconcile their results to the new international standard, which would likely spur some U.S. firms to make the switch at home, participants at the discussion said.
European Union Commissioner Charlie McCreevy, speaking at the same meeting, said corporate accounting and disclosure has improved with the shift to the new international financial reporting standards.
'There is still work to be done, but I am confident that we are on the right track,' McCreevy said.
One problem for regulators is that the international standards are relatively new and companies are still getting used to them. Cox stressed the need for those using the new international accounting to demonstrate that it is a single, uniform standard, not a 'multiplicity' of standards.