Preparers would not expect the SEC to conduct routine inspections of auditors' working papers and would expect such inspection only to take place on a basis compatible with European law where there was an identifiable suspicion that auditing standards had not been met. Insofar as company accounting systems are not specifically designed to evaluate the effects of accounting differences with US GAAP, reconciliation will inevitably be done on the basis of estimations and approximations, and therefore the quality will never be similar to that of the primary financial statements. The objective surely must be to agree and accept IASs without reconciliation. Where, by extreme exception, this is not deemed possible, we believe that any distinct requirements should take the form of note disclosure and not bottom line reconciliation. Please refer to our answer to question 22.
Reconciliation is preferable to retrospective application.
The accounting profession is better placed to comment on this.