(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Comment Period Closes on International Financial Reporting Standards

The 100 Group Technical Committee, which represents the finance directors of leading companies listed in the United Kingdom, expressed support for the SEC's proposal to allow issuers to file two rather than three years of financial information after the first time application of international financial reporting standards, or IFRS. This is an important concession at a time when the transition is placing considerable pressures on company resources, according to the 100 Group. However, given that companies in Europe are only required to adopt those standards endorsed by the European Union, the 100 Group raised concerns that the concessions apply to companies that adopt the complete set of IFRS. The group urged the SEC to reconsider its eligibility requirement to ensure that companies are not disadvantaged by delays in EU endorsements of the complete set of standards. The amendment should not restrict voluntary adoption of unendorsed standards, the group added. The comment period on the application of IFRS ended April 19, 2004.

Two standing committees of the Association for Investment Management and Research wrote that, despite reservations, they are willing to support the SEC's proposal to provide relief from the restatement of the third year of financial data. This exemption should only apply to companies adopting IFRS, the committees added, and the window of opportunity for such relief should be short. The AIMR committees said their support for the proposal is conditioned upon the SEC requiring additional information in prescribed formats so that investors can understand the changes and update their analytical and valuation models.

AIMR called for both numerical and narrative explanations for the financial statements prepared under previous generally accepted accounting principles and those prepared under IFRS. AIMR added that is it not willing to relinquish U.S. GAAP reconciliation, since it believes the requirement will encourage the Financial Accounting Standards Board and the International Accounting Standards Board to work diligently to resolve their substantive convergence issues. AIMR also said that the SEC should require third year financial statements if they are required or provided by the issuer in any other jurisdiction.

AIMR expressed disappointment that the SEC did not take the opportunity to require interim reporting by IFRS reporting entities and urged that it do so in the final rule. AIMR said it was also disappointed that the SEC did not accelerate the filing of annual results for all Forms 20-F and 40-F reporting entities, and encouraged it to take that step in the final rule as well.

PricewaterhouseCoopers noted that the transition to IFRS starting January 1, 2005, coincides with the SEC's requirements for foreign issuers relating to the management reports and public accounting firm reports on internal control over financial reporting which will add to the pressure on company resources. PwC urged the SEC not to mandate condensed U.S. GAAP balance sheet information and urged it to give further consideration to the need for accommodations under its industry guides since first time IFRS providers will have trouble providing certain information on a consistent basis for periods earlier than the two years of IFRS financial statements that are presented.