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By Paul Pacter, PhD, CPA, International Accounting Fellow

IASC Proposes Fourth Basic Financial Statement

In Exposure Draft E53 issued in July, the International Accounting Standards Committee has proposed that companies present a fourth basic financial statement, tentatively called a Statement of Non-Owner Movements in Equity, in addition to the balance sheet, income statement, and cash flow statement. The aim of this statement is to highlight more prominently gains and losses that are not reported in the income statement under existing IASC Standards.

Examples would include deferred foreign exchange differences, the effect of revaluing property, plant, and equipment, and unrealized gains and losses on investment securities. Heretofore, these items were reported as a single line in the stockholders' equity section of the balance sheet.

Several projects now on IASC's agenda are likely to identify additional gains and losses that should not be reported in income but that should be prominently displayed in financial statements. These include the projects on financial instruments and agriculture. The new statement will provide the place to do so.

SEC Now Among the Observers At All IASC Meetings

In recognition of the growing importance of International Accounting Standards Committee standards in the U.S., the Office of the Chief Accountant of the U.S. SEC will be one of the representatives of the International Organization of Securities Commissions at all IASC meetings. Chief Accountant Michael Sutton attended his first IASC Board Meeting in Stockholm in June.

In April 1996, the SEC made the following announcement:

"The commission is pleased that the IASC has undertaken a plan to accelerate its development efforts with a view toward completion of the requisite core set of standards by March 1998. The commission supports the IASC's objective to develop, as expeditiously as possible, accounting standards that could be used for preparing financial statements used in cross-border offerings."

The SEC already allows foreign registrants to follow three IASC Standards in lieu of U.S. GAAP. *

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