THE ERA of convergence between IFRS and US GAAP should be formally ended in a matter of months, not years, the ICAEW has said.
The IASB’s decade-long project with US standard setter FASB to converge international and American accounting rules is coming to close with little interest on either side to continue with it.
Work to harmonise revenue recognition rules has been largely successful, but reaching agreement on other projects – notably financial asset impairment, lease accounting and insurance – look unlikely.
In a new report, The Future of IFRS, the ICAEW has urged the IASB to push ahead with its proposed solutions – with or without the FASB ‘s support. Nigel Sleigh-Johnson, head of ICAEW’s Financial Reporting Faculty, says the IASB should not put reaching a converged solution with the US ahead of finding quality solutions.
“The IASB should now focus squarely on the needs of countries that have adopted its standards and push ahead quickly with finalising its own requirements for, in particular, financial instruments and insurance contracts,” Sleigh-Johnson said. “It is better that the IASB and FASB boards issue separate standards, than deliver unsatisfactory compromise solutions or do nothing at all”.
The institute also suggests that all listed companies around the world should have the option of applying IFRS.
“All listed companies in major countries currently not part of the ‘IFRS family’ should be given the option of reporting under IFRS, including the US,” said Sleigh-Johnson.
“Governments should let the market speak. Companies should be permitted to assess for themselves whether the benefits of transition outweigh the costs”.