The move toward globalization of accounting standards may have just taken a giant step forward.

The SEC, in a move it says will “help American investors better analyze and get more readily comparable financial information from the U.S.-registered foreign companies in which they invest,” has ruled that foreign private issuers in the United States will not have to reconcile their financial statements with U.S. generally accepted accounting principles, provided that the statements are prepared using international financial reporting standards (IFRS) from the International Accounting Standards Board.

“The purpose of the requirement,” says the SEC, “is to encourage the development of IFRS as a uniform global standard, not a divergent set of standards applied differently in every nation.”

The move drew praise from many in the business world and came one day after the AICPA urged the SEC to “harmonize” American and international financial reporting.

“We believe one common accounting language would benefit investors, as well as issuers and the capital markets, because it would facilitate the comparison of reporting entities domiciled in different countries,” AICPA Chair Randy Fletchall and President Barry Melancon wrote in a letter to the SEC.    

What do you think about the SEC’s move?