age of financial statements. While wholesale adoption of IOSCO’s disclosure re-
quirements may seem radical, the IOSCO disclosure provisions were very heavily in-
fluenced by the SEC’s requirements, and resulted in very few substantive changes to
the existing Form 20-F.
The SEC’s implementation of the IOSCO international disclosure standards will
help provide a more consistent base of disclosure requirements for cross-border of-
ferings in the United States and other jurisdictions adopting the IOSCO standards.
However, the approach of IOSCO members of promoting the adoption of IOSCO
standards in each of their individual jurisdictions, but without a concept of reciproc-
ity allowing for the acceptance in all IOSCO member jurisdictions of one disclosure
document review by one regulator, will limit what can be achieved with the IOSCO
standards. Disclosure is likely to continue to vary from market to market, as each
regulator’s review and interpretation of the disclosure for a cross-border offering will
be based on its own laws and practices, and the standards of legal liability relating to
securities offerings will continue to vary from market to market. Consequently, the
need to reconcile disclosure in a cross-border transaction is very likely to continue to
exist despite the fact that all relevant jurisdictions are applying the same basic
IOSCO disclosure standards.
More important, while implementation of the IOSCO standards brings at least the
foundation for nonaccounting disclosure closer together in different markets, it will
not promote significant movement toward the goal of producing a single disclosure
document for use in multiple jurisdictions until agreement is reached on a core set of
international accounting standards. It should also be noted that the “Management’s
Discussion and Analysis” (called “Operating and Financial Review and Prospects” in
the 20-F), which the SEC regards as being at the heart of any corporate disclosure,
and which includes a quantitative and qualitative discussion of market risk, is viewed
by the SEC as being financial, rather than nonfinancial disclosure. Thus, the apparent
movement toward harmonization in this area is somewhat limited.
(iii) International Accounting Standard Committee. As a result of the problems asso-
ciated with differences in accounting standards and principles among different coun-
tries, the United States and various other countries have become involved in a num-
ber of projects with a goal of encouraging harmonization of accounting standards.
The first such project, the International Accounting Standards Committee (IASC), an
arm of International Federation of Accountants (IFAC), discussed below, was formed
in 1973 by the United States and eight other countries. The purpose of the organiza-
tion was primarily to articulate international accounting standards. There are approx-
imately 100 organizational members of the IASC, representing accountants from
more than 74 countries. The IASC has issued many international accounting stan-
dards dealing with topics of major importance to the presentation of financial state-
ments worldwide. SEC accountants and other professional staff participate in IASC
projects. (See Chapter 16 for a further description of the IASC.)
Adoption of IASC standards would result in a reduction of the alternate measure-
ment and recording standards that currently exist. Being a private sector organiza-
tion, the IASC has no effective means to enforce compliance with its pronounce-
ments. As a result, the IASC must rely on its members, who are pledged to use their
best efforts to achieve compliance with, and acceptance of, the international ac-
counting standards worldwide. Voluntary implementation has achieved a certain
amount of success. Many members of the Toronto Stock Exchange, for example,
14 • 18 GLOBALIZATION OF WORLD FINANCIAL MARKETS