There had been talks going round since last couple of months to recognize IFRS for all the foreign companies listed in US Stock Exchanges. As speculated the good news is that all foreign companies listed in United States are no more required to follow US GAAP. The companies are now given the option to file the English version of IFRS sets of books of accounts as the US lawyers and accountants are better versed in English. The option of complying with US GAAP is open and if the companies still want to follow it they can do so. The proposal is unanimously voted by the Securities Exchange Commission (SEC) which is the regulatory body in US. So this means a sigh of relief for all the foreign companies and also death of US GAAP for all foreign companies listed in US.

The decision was awaited since long and it comes as a breather for the mediocre companies listed in US. This will definitely result in cutting down of cost for those companies. As per the present requirement, if a company is having multi listing, it is required to follow USGAAP for US stock Exchange and IFRS for any other foreign stock exchange, basically European Countries. This further requires preparing two sets of books of account based on IFRS and USGAAP and the reconciliation of the same with the books of account prepared according to accounting system of home country. It was one of the major reasons for mediocre companies shying away from listing in US Stock Exchange. The verdict will encourage companies for US listing as they are no more required to comply with USGAAP.

The move is in parlance with the deadline of 2009 set by SEC for convergence of USGAAP with IFRS. So far as US companies are concerned, they are still required to follow the USGAAP and this option is not open to them. A white paper on the applicability of this relief for US companies is expected to be issued by this summer. But the chances of US companies enjoying such liberalization are very bleak. From the Indian perspective, more and more US listing will come up in future due to this move.

Indian Companies – “Enjoy Happy listing in NASDAQ!”

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