Response to the U.S. securities and exchange's proposed rule: Roadmap for the potential use of financial statements prepared in accordance with international financial reporting standards by U.S. issuers (Release No. 33-8831; 34-56217; IC-27924; File No. S7-20-07)

This paper is a response to the U.S. Securities and Exchange Commission's request for comments on its proposed rule concerning a "Roadmap" for the use of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) by U.S. issuers. The paper addresses only a few of the 70 multipart questions contained in the Roadmap (refer to the Appendix for a list of all 70 questions). We find that while there are widely divergent opinions, little empirical evidence directly bears on the question of whether U.S. issuers should be required or permitted to adopt IFRS. We conclude that further analysis of the costs and benefits of a mandated transition to IFRS should be done. Notwithstanding the need for further analysis, we question whether it is justified to withhold from U.S. issuers the option to use IFRS for financial reports based on industry membership or size, when all non-U.S. issuers have the option to do so. While IFRS might marginally increase the concentration among audit firms, research suggests that concentration of audit services may be driven primarily by the litigious environment in the U.S. This suggests that concentration would be relatively unaffected by a change in accounting standards.