While accounting standards converge across the globe, standard setters, users and finance directors are increasingly talking a different language at cross purposes.

The International Accounting Standards Board has one overriding aim. It wants to see the vast majority of the world’s economies using international accounting standards. The board, led by Sir David Tweedie, sees that the US could move away from US Gaap, which is now seen as crumbling under its own weight. With India, China, Canada and Japan recent converts to the IASB’s cause it seems the bandwagon is unstoppable.

While the IASB sells the dream of one set of global accounting standards ­ and appears to be in sight of the winning line ­ rather than enjoying well-deserved plaudits it faces mounting criticism. Increasingly, FDs from the world’s largest companies are questioning whether one set of global accounting standards is the Holy Grail we all assumed it was.

FDs are unhappy with the IASB’s conceptual framework. Promulgating standards while the conceptual framework project drags on has been compared to starting a journey without a map and where none of the travellers know where they are meant to be heading. Without a coherent and accepted conceptual framework it is suggested radical changes cannot be made to existing standards. And there remains deep scepticism over the balance sheet approach to measuring financial performance. As the IASB’s discussion paper on a conceptual framework puts it: “An entity first identifies and measures its economic resources and the claims on them.”

For years, the IASB has been accused of being hung up over fair values, attaching too much importance to a valuation model which research suggests does not inform business valuation. It denies this accusation and says that it accepts a mixed model of valuation is required. Its reassurances are greeted with reactions ranging from scepticism to disbelief. Fears are also expressed over the IASB/FASB project on financial statement presentation with FDs expressing concerns that the needs of users are being forgotten.

The price that the FD community and the user community is being asked to pay for the current direction of financial reporting is seen to be too high, in terms of size and complexity. The average size of a FTSE-100 report is 140 pages in 2007 ­ up eight pages from last year ­ and they are expected to get bigger, especially as narrative reporting increases. Restrictions on the number of HSBC reports that postal workers were allowed to carry on the grounds of health and safety has become the stuff of urban myth. And if they can’t carry them, no one else can understand them, not even professional users. One investment analyst for a global bank said that he attempted to conduct an analysis looking at companies’ US/international Gaap reconciliation. He wanted to split the reconciling items into two piles: real economic impact and bookkeeping differences. But when he came to look at the published information, in many instances he had no way of finding the answer he wanted. He suggested that auditors would need to use employees with a PhD in maths if they wanted to check whether the models constructed by their clients for financial instruments were correct.

With standard setters relentlessly pursing one course, FDs losing faith and users bemused, they are all playing a ‘pass the parcel’ blame game. The IASB calls for accounts to be based on principles and condemns the way that it is constantly called upon to provide guidance, either in appendices to the standards or through its interpretations committee. It says auditors must revert to relying on judgement and calls for the accounting profession not to let lawyers in court rooms decide accounting arguments. Principles or rules, says the IASB, is the FDs’ decision. But such pleas seem in vain, calling for a change in culture across continents that cannot be achieved. Equally, FDs constantly complain about the intricate level of disclosure they are required to produce. As for the professional user community, it shrugs its shoulders and admits to not using much of the information provided.

All three stakeholders see financial statements as complex, compliance-based, balance sheet-focused, carrying unrealised profit and excessive, worthless disclosures. Standard setters, preparers and users agree on the problems, but there is no meeting of minds on the causes or the solutions. Some preparers and auditors believe that financial reporting should highlight value creation and international accounting standards, as published by the IASB, should be seen as a benchmark and that the main work at international level should be a convergence of principles not necessarily of rules. But the IASB cannot halt the juggernaut it has started with the blessing of capital markets, governments and regulators. The advantages of lower cost of capital and cross-border investor confidence in published numbers in different jurisdictions are a prize many seek. Financial reporting may be on a course that many see as deeply unsatisfactory, but there is no realistic prospect of diverting it.