Herz calls for calm approach in IFRS convergence rush

Herz calls for calm approach in IFRS convergence rush

Rushing IFRS convergence could compromise its aim, according to head of US financial Accounting Services Board, who suggests that the SEC should back off from the standard-setters' convergence plan

It may be the home of the world’s largest capital markets, but the US needs
more time to make sense of IFRS, its leading accounting figures have warned.

Bob Herz, the head of the US Financial Accounting Services Board, has
suggested that the Securities and
Exchange Commission
should back off from the standard-setters’ convergence
plan.

Appearing before a US senate hearing, Herz conceded that pressure to complete
the convergence project has increased, but warned that rushing convergence could
compromise its aim.

In a bid to push things along, the SEC put out a proposal, discussing the
possibility of allowing foreign companies listed in the US to file their
accounts using IFRS. The watchdog has also proposed giving US companies the
option of choosing US GAAP or IFRS.

But this could result in a dual accounting system, which could hinder the
ultimate goal of convergence. Others have also raised concerns about moving too
quickly.

Lynn Turner, a former SEC chief accountant, said US investors’ ‘ability to
analyse the financial statements of companies preparing IFRS in a meaningful
fashion will be limited’.

Former IASC secretary-general David Cairns also warned that US accounting
professors ‘are generally not teaching IFRS’.

‘It [the US] should set itself a deadline of using IFRS as we did in Europe
and get everyone to change: companies auditors and teachers,’ said Cairns.

The IASB and FASB are under increasing pressure from multinationals to forge
ahead with convergence as quickly as possible, but opposition to moving too fast
seems to be building with equal fervour.

Related Articles

FRC reports an “unacceptable deterioration” in KPMG audit quality

Audit FRC reports an “unacceptable deterioration” in KPMG audit quality

16h Alia Shoaib, Reporter
PwC fined a record £10m over BHS audit

Audit PwC fined a record £10m over BHS audit

7d Alia Shoaib, Reporter
KPMG fined £4.5m over Quindell audit misconduct

Audit KPMG fined £4.5m over Quindell audit misconduct

1w Alia Shoaib, Reporter
PwC to net £50m from Carillion insolvency

Accounting Firms PwC to net £50m from Carillion insolvency

2w Alia Shoaib, Reporter
Deloitte faces disciplinary action over Autonomy accounts scandal

Audit Deloitte faces disciplinary action over Autonomy accounts scandal

3w Alia Shoaib, Reporter
Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

4w Martin Herron, MHA MacIntyre Hudson
Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

Audit Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

1m Emma Smith, Managing Editor
PCAOB sanctions former Deloitte Turkey CEOs over altered documents

Audit PCAOB sanctions former Deloitte Turkey CEOs over altered documents

1m Alia Shoaib, Reporter