Drop US GAAP reconciliation, says E&Y

Ernst & Young has called for the US Securities and Exchange Commission to
give up its insistence that companies reporting in IFRS need to reconcile to US
GAAP.

The Big Four firm said today that, although the road to true convergence with
a single set of universally accepted global accounting standards is very long
and would take several years to complete, there was already ‘equivalence’
between the accounting standards used across Europe and the US.

As such, the need for European companies to reconcile their accounts before
filing them with the SEC is increasingly being questioned, said the firm.

‘Companies are questioning, not only the value to investors of these
reconciliations, but also their appropriateness in the light of the new and
improved standards issued by the International Accounting Standards Board over
the past two years,’ said Allister Wilson, E&Y’s UK head of financial
reporting.

Wilson added that a new US GAAP hierarchy from the Financial Accounting
Standards Board, which includes IFRS, might encourage the SEC to drop its
reconciliation requirement in the immediate future.

But the US financial watchdog is likely to want to see progress along the
recently agreed convergence roadmap before it takes such a decision.