INTERNATIONAL FINANCIAL reporting standards should be adopted by major US companies in a ‘Big Bang’-style simultaneous transition, the ICAEW has argued.
Dr Nigel Sleigh-Johnson, head of the institute’s Financial Reporting Faculty, claimed switching in one fell swoop is evidentially better, as gradual transitions like those of private UK companies “can result in a rather incoherent and complex accounting framework”.
Simultaneous transition is “the best strategy to minimise market disruption” and is “easier for everyone”, said Sleigh-Johnson, calling for a well-understood deadline and sense of purpose.
US regulator the SEC has coined the phrase condorsement – a marriage of convergence and endorsement – to describe one possible method for switching to IFRS.
In a staff paper it mooted the idea of a staged transition process lasting between five and seven years, but the ICAEW said such a timetable is “optimistic”, claiming: “We think the process, based on the outlines in this paper, is likely to take significantly longer.”
Last month, SEC commissioner Kathleen Casey called on the regulator to stop dragging its heels and participate fully in convergence, saying it had an essential role to play in the development of global financial reporting standards.
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Pell admits he was “a bit surprised” by the letter but believed the audit would re-start after a number of issues have been resolved