Social Security: d08404r

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United States Government Accountability Office Washington, DC 20548 B-310945 January 18, 2008 The Honorable Christopher J. Dodd Chairman The Honorable Richard C. Shelby Ranking Minority Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Barney Frank Chairman The Honorable Spencer Bachus Ranking Minority Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Acceptance From Foreign Private Issuers of
    United Stats Government Accountability Office WashingtonDC 20548e, B-310945 January 18, 2008The Honorable Christopher J. DoddChairmanThe Honorable Richard C. ShelbyRanking Minority MemberCommittee on Banking, Housing, and Urban AffairsUnited States SenateThe Honorable Barney FrankChairmanThe Honorable Spencer BachusRanking Minority MemberCommittee on Financial ServicesHouse of RepresentativesSubject: Securities and Exchange Commission: Acceptance From Foreign Private Issuers of Financial Statements Prepared in Accordance Wth International Financial Reporting Standards Without Reconciliation to U.S. GAAP    i   Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on amajor rule promulgated by the Securities and Exchange Commission (Commission),entitled “Acceptance From Foreign Private Issuers of Financial Statements Preparedin Accordance With International Financial Reporting Standards WithoutReconciliation to U.S. GAAP” (RIN: 3235-AJ90). We received the rule onDecember 27, 2007. It was published in the Federal Register  as a final rule on January 4, 2008. 73 Fed. Reg. 986. The final rule is effective on March 4, 2008. Id.  The final rule allows foreign private issuers to file with the Commission financialstatements prepared in accordance with International Financial Reporting Standards(IRFS) as issued by the International Accounting Standards Board (IASB) withoutreconciliation to generally accepted accounting principles (GAAP) as used in theUnited States. The Commission has long viewed reducing the disparity between theaccounting and disclosure practices of the United States and other countries as animportant objective both for the protection of investors and the efficiency of capitalmarkets.Enclosed is our assessment of the Commission’s compliance with the proceduralsteps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the GAO-08-404R  rule. Our review indicates that the Commission complied with the applicablerequirements.If you have any questions about this report, please contact Michael R. Volpe, Assistant General Counsel, at (202) 512-8236. The official responsible for GAOevaluation work relating to the subject matter of the rule is Richard Hillman,Managing Director, Financial Markets and Community Investment. Mr. Hillman canbe reached at (202) 512-8678.signedRobert J. Cramer Associate General CounselEnclosurecc: Nancy MorrisSecretarySecurities and Exchange Commission Page 2 GAO-08-404R    ENCLOSUREREPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A MAJOR RULEISSUED BY THESECURITIES AND EXCHANGE COMMISSIONENTITLED ACCEPTANCE FROM FOREIGN PRIVATE ISSUERS OF FINANCIALSTATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIALREPORTING STANDARDS WITHOUT RECONCILIATION TO U.S. GAAP (RIN: 3235-AJ90)(i) Cost-benefit analysisThe Commission performed a cost-benefit analysis of the final rule. The analysisincluded several benefits and several costs resulting from the rule. As an example of a benefit, the Commission explained that acceptance of financial statements prepared using IFRS is expected to help foster the use of IFRS as a way of moving toa single set of globally accepted accounting statements, which the Commissionbelieves will have positive effects on investors. As an example of a cost, theCommission noted that the minimum required information that investors in the markets receive from any foreign private issuer will differ from what it was previously. A potential cost could be incurred if an investor loses informationcontained in the reconciliation that the investor would use to understand differencesin certain financial results under IFRS and U.S. GAAP for a particular issuer.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,607, and 609The Commission certified that the final rule would not have a significant economicimpact on a substantial number of small entities. For this reason, the Commissiondid not prepare a Final Regulatory Flexibility Analysis.(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532-1535The final rule, promulgated by an independent regulatory agency, is not subject totitle II of the Unfunded Mandates Reform Act of 1995.(iv) Other relevant information or requirements under acts and executive orders Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.The final rule was issued using the notice and comment procedures contained in5 U.S.C. § 553. On July 11, 2007, the Commission published a Notice of Proposed GAO-08-404R  Rulemaking in the Federal Register  . 72 Fed. Reg. 37,962. The Commission receivedapproximately 125 comments in response to the proposed rule and responds to thosecomments in the final rule.Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520The final rule contains “collection of information” requirements within the meaningof the Paperwork Reduction Act. The Commission submitted these requirements tothe Office of Management and Budget for review.Statutory authorization for the ruleThe final rule was promulgated under the authority of sections 6, 7, 10, and 19 of theSecurities Act of 1933, as amended, sections 3, 12, 13, 15, 23, and 36 of the Securitiesand Exchange Act of 1934, and sections 3(c)(2) and 108(c) of the Sarbanes Oxley Actof 2002.Executive Order No. 12,866The final rule, promulgated by an independent regulatory agency, is not subject tothe review requirements of the order. Page 2 GAO-08-404R
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