Fears for IFRS as watchdog warns US will miss 2014

Paul Boyle, FRC chief executive

The UK’s chief financial reporting regulator has said adoption of international accounting standards for all listed US companies will not be achieved by 2014, adding weight to concerns that the appetite for IFRS is waning under the Obama administration, which could place global convergence efforts in jeopardy.

Paul Boyle, chief executive of the Financial Reporting Council, made the forecast as the world’s leaders prepare to descend on London to discuss the roots of the financial crisis at the G20 conference.

‘I personally think the date for full adoption will be quite a long way into the future past 2014,’ said Boyle.

‘What we should be focusing on is under what conditions the SEC could allow the companies that want to use IFRS could be given the options to do so, which would be a lot more useful.’

Progress on the IFRS roadmap, which dictates the schedule for the conversion, has been hindered by the financial crisis and the arrival of Mary Schapiro as head of the Securities and Exchange Commission.

Experts believe there could be serious repercussions for global convergence efforts if the US continues to drag its heels, or even pulls out completely.

The accounting framework is likely to be up for discussion at the summit and calls have been made for leaders to back international standards if a breakdown in convergence efforts is to be avoided.

Steve Maslin, head of external and professional affairs at Grant Thornton, said: ‘It’s desperately important that out of the G20 nothing is done to undermine the legitimacy of the International Accounting Standards Board.

‘It would be a disaster to set up a European accounting body in competition with the IASB,’ he added. ‘To have a single robust set of standards is clearly the desire. The US should be focusing on that rather than any particular deadline.’

Schapiro has stopped short of any public endorsement of the IFRS roadmap drawn up by her predecessor Christopher Cox, preferring to say ‘she would not be bound by the roadmap’.

The roadmap is out to public consultation until 20 April – but it has already received a lukewarm reception in the US.

The integrity of the accounting standards has already been dealt a serious blow after the International Accounting Standards Board had to amend fair value rules last year in order to avoid a larger carve-out threatened by EU mandarins.

Boyle added: ‘I hope the accounting standards will be defended at the G20.

‘I’m not saying they are incapable of improvement, but I don’t think the accounting standards have been the cause of the crisis.’

The SEC declined to comment.