Ambitious convergence targets agreed by IASB

The prospect of creating one set of accounting standards used across global
markets moved a step closer this week, but concerns were raised over the speed
at which convergence could be achieved.

A work programme has been agreed between the International Accounting
Standards Board and its US counterpart that could remove the costly
reconciliation requirements for international companies that file accounts in
the US, by as early as 2008.

The date would be a major landmark along the road towards making
international and US accounting standards virtually identical by 2011.

Sir David Tweedie told Accountancy Age that, while the programme would be a
challenge, it would not be as difficult as the 2005 project to establish a
stable platform, which he admitted had been ‘rushed through’.

Both the Securities and Exchange Commission and the European Commission
support the programme, which will see the IASB tackle six short-term projects
and 11 larger projects. Internal market commissioner Charlie McCreevy welcomed
the move, but insisted that it be ‘reviewed regularly and that companies,
auditors and market participants be given every opportunity to contribute’.

But some were concerned that such a major project should be undertaken so
soon after the introduction of IFRS.

David Lindsell, global IFRS director at Ernst & Young, said that, while
it would be beneficial to US-listed companies, ‘the vast majority would rather
see a period of bedding down before another big change’.

Nigel Sleigh-Johnson, head of financial reporting at the ICAEW, also urged a
note of caution, arguing that the SEC’s tendency to introduce rules could see
them imported into Europe by default, damaging the principles-based nature of
current UK practice.

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