ICAEW: US standards proposal complicates convergence
Institute takes a pop at the US standards setter's proposal for fair value accounting
A proposal by the US accounting standards setter to use fair value for all
assets will increases complexity and complicate the strategy to converge with
international rules, claims the
ICAEW.
Dr Nigel Sleigh-Johnson, head of the ICAEW’s Financial Reporting Faculty,
said that
FASB’s
strict model for measuring financial instruments will make statements harder to
read and information more difficult to understand for investors.
“Simplification of the standards for financial instruments accounting is a
key priority, and is an objective endorsed by the G20 governments. The FASB’s
proposals are surely pulling in the wrong direction,” said Sleigh-Johnson.
The
IASB’s model contains ‘mixed measurement’: which results in
financial instruments being stated at either amortised cost or fair value in the
primary financial statements (with fair values for all financial instruments
disclosed in the notes).
The ICAEW has been the most vocal accounting institute on the convergence
debate.
In
February the ICAEW said the US Securities and Exchange Commission
had failed to provide certainty on US plans to adopt international standards.
Further reading:
It’s
time for the US to show some leadership on convergence: ICAEW