For almost two decades, the Securities and Exchange Commission (SEC) has allowed foreign companies that want to list shares on U.S. national exchanges to file their financial statements using international accounting standards without reconciliating them to U.S. accounting rules that domestic companies must follow.
Could that change under the America First policy of the Trump administration?
That depends on whether the International Accounting Standards Board (IASB)—which sets International Financial Reporting Standards (IFRS)—is able to secure full funding for its operations as a sister but newer organization is now setting sustainability reporting standards, according to Trump’s appointee to lead the SEC, Paul Atkins. The Trump administration has also been removing policies from prior administration related to environmental, social, and governance (ESG) matters in the U.S.
“If the IASB does not receive full, stable funding, then one of the underlying premises for the SEC’s elimination of the reconciliation requirement for foreign companies in 2007 may no longer be valid, and we may need to engage in a retrospective review of that decision,” Atkins warned in a speech at the inaugural OECD roundtable on global financial markets in Paris on September 10, 2025.
Atkins’ remarks come as the SEC is working on a rulemaking project that will update the definition of foreign private issuers (FPIs) to better reflect the changes that have occurred in the global regulatory and business environment since 2008, the last time the commission reviewed the foreign company regulatory framework. FPIs are afforded regulatory flexibility to provide access for U.S. investors while maintaining investor protections. In certain circumstances, FPIs do not have to comply or only partially comply with requirements for domestic public companies, creating an uneven playing field.
The IFRS Foundation, the parent organization of the IASB and the International Sustainability Standards Board (ISSB), receives income from two main sources—contributed and earned revenues. Total revenue at the end of 2024 was £67.6 million (about US$91.6 million), with 61% from contribution and 39% from earned revenues, such as licensing. Because the IFRS Foundation heavily depends on voluntary contributions, the organization has struggled to maintain sustainable funding. Its 2024 annual report discusses strategies to build medium- to long-term funding strategy for both income streams.
SEC’s 2007 Rule Change
Atkins was an SEC commissioner from 2002 to 2008, and he voted to support the rule change in 2007 to let FPIs present their financials prepared in accordance with IFRS without reconciliation to U.S. GAAP.
The SEC at the time noted that “the IASB’s sustainability, governance and continued operation in a stand-alone manner as a standard setter are significant considerations in [eliminating the reconciliation requirement], as those factors relate to the ability of the IASB to continue to develop high-quality globally accepted standards.”
The U.S. commission noted the ability of the IASC Foundation—the predecessor to the IFRS Foundation—to obtain “stable funding” for the IASB.
But the IFRS Foundation in 2021 said that it was forming the ISSB and would have to secure funding for two standard-setters.
“This recent expansion of the IFRS Foundation’s remit cannot divert its focus from its long-standing core responsibility of funding the IASB,” Atkins said. “In turn, the IASB must promote high-quality accounting standards that are focused solely on driving reliable financial reporting and are not used as a backdoor to achieve political or social agendas.”
He emphasized the importance of reliable financial reporting to support capital allocation decisions.
“We all have a strong interest in the IASB’s being fully funded and operational, and I encourage the IFRS Foundation to meet its goal for ‘stable funding’ that prioritizes the IASB and its focus on standards for financial accounting, rather than specious and speculative issues,” Atkins said.
In an emailed statement, the IFRS Foundation said that the SEC is an important stakeholder.
“The IFRS Foundation was asked to establish the ISSB in response to investor and capital market demand globally for financially material sustainability-related financial disclosures,” the organization said. “The IASB and the ISSB operate and are funded independently – a key consideration when the ISSB was established – whilst their respective standards do not impose requirements on each other.”
“The IFRS Foundation is midway through a two-year transformation programme to ensure we are efficient and effective in delivering for capital markets, including the development of our long-term funding strategy,” the organization added.
Support for Reconciliation to US GAAP
Regardless of IASB funding, many U.S. investors and analysts want the SEC to require reconciliation to U.S. GAAP.
“When the two boards—the U.S. Financial Accounting Standards Board and IASB—were working together on joint projects, such as revenue recognition and leasing, it looked like true convergence was a real possibility in the future,” said Dennis Beresford, chair of the FASB from 1987 to 1997.
“While the boards continue to communicate and cooperate, convergence no longer seems to be an imperative,” he said. “I think U.S. investors mainly understand generally accepted accounting principles to mean those from the FASB, so it probably is time for the SEC to seriously consider going back to the reconciliation requirement for foreign issuers.”
Jack Ciesielski, founder of R.G. Associates, Inc., believes the SEC should eliminate the 2007 rule.
“The old saw is that you manage what you measure. For years the IASB and the FASB have been working separately from each other, while developing new standards in consultation with each other,” explained Ciesielski who serves on the FASB’s Emerging Issues Task Force. “But you really don’t know how well those standards mesh until you see the results in practice period that reconciliation used to provide first-rate evidence of how close the reporting results were from those two sets of standards.”
Bringing back the reconciliation would give them concrete data and help them address their differences more efficiently, he said.
“Investors and analysts would benefit greatly as well, for they would be able to see differences that might affect their valuation work,” Ciesielski added. “They would also benefit from knowing where applications of the two standards might produce significant differences among companies.”
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