Incorporation of IFRS in the United States: An Analysis of the SEC's Options and the Implications for the EU

Pöschke Moritz
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Pöschke Moritz: *Dr Moritz Pöschke, LLM (Harvard), Dipl-Kfm, Attorney-at-Law (Germany) is a postdoctoral candidate (Habilitand) with Prof Dr Joachim Hennrichs and Lecturer in Law at the University of Cologne, Germany, as well as practising attorney in Düsseldorf, Germany. This article is based on a paper that was accepted by Harvard Law School as part of the author's LLM studies in the spring term of 2011.

European Company and Financial Law Review, 2012, vol. 9, issue 1, 51-73

Abstract: The increasing level of globalization and the current dynamics in international politics make it very likely that within the coming years the SEC will incorporate IFRS into the financial reporting system for U.S. issuers. The economic advantages and disadvantages of a switch to IFRS have been extensively analyzed. This article assumes that the SEC will incorporate IFRS and it explores the most efficient way for the SEC to do so from a legal perspective. The analysis of the SEC's options considers: (i) that the system of U.S. GAAP is interconnected with U.S. securities law and other areas of regulatory law; (ii) that the overall aim of switching to IFRS is to achieve international comparability of financial reports; and (iii) that considerations of sovereignty require the SEC to maintain a certain degree of influence over the process of setting mandatory accounting standards for companies based in the United States. Subsequently, the article briefly outlines possible impacts of an efficient choice by the SEC on the IFRS as a system of global accounting standards. The analysis concludes by showing that the interests of the SEC and the European Union with regard to the technical way of implementing IFRS in the United States are very much aligned.

Date: 2012
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DOI: 10.1515/ecfr-2012-0051

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