Case C10-5 IFRS - Consequences of IFRS adoption in the U.S.

For several years, the Securities and Exchange Commission (SEC) has been considering whether to transition U.S. firms to International Financial Reporting Standards (IFRS) for filing public financial reports.

During 2011, Matthew J. Foehr, the vice president and comptroller for Chevron Corporation, sent comment letters to both the SEC and the International Accounting Standards Board (IASB), stating, Chevron would object to any plan to incorporate IFRS into U.S. GAAP if it would result in a significant income-tax penalty for our company.³⁸

In its 2012 Annual Report, Chevron reports:

Inventories

Crude Oil, petroleum products and chemicals inventories are generally stated at cost, using a last-in, first-out method. In the aggregate, these costs are below market. Materials, supplies, and other inventories generally are stated at average cost.

1. Why might Mr. Foehr be concerned that IFRS would trigger a significant income-tax penalty for Chevron?