On the money
Lord Turner's comments are the latest in a long line of misgivings over international standards convergence
Adair Turner last week added his voice to a growing chorus of concern
surrounding the IASB’s convergence project. The board has been working with US
standard setter, the Financial Accounting Standards Board, to create a common
accounting language which stretches across the world.
But its not without its critics. In July last year the Fédération des Experts
Comptables Européens, which represents more than 500,000 European accountants,
said there were “diminishing returns from further converging with US GAAP”. In
September, Dr Nigel Sleigh-Johnson, head of financial reporting at the ICAEW,
said: “It is not something that has been debated in any useful way,(and) is
something that needs to be kept closely under review.”
Stephen Haddrill, chief executive of the FRC, told Accountancy Age in
December that convergence should not “just be about translating American
standards into an international shape”.
And now Lord Turner has raised concerns himself, as the two boards try to
reconcile their approaches to fair value. “It is not so much that they are in
danger of compromising (international standards), it is that, in the process of
trying to reconcile them, they make it more complex.”
Perhaps all the argument misses the point – without convergence, there might
not be any international standards.
Imagine this scenario. Convergence is abandoned. The US continues with its
GAAP, with no firm timeline for taking on international standards. Within
months, Japan decides to rethink, Canada begins making reluctant noises, Europe
sets up a rival advisory board which goes on to become the European Accounting
Standards Board.
Fantasy? Perhaps the IASB’s stubborn and determined push for convergence is
because it has more to lose from walking away than it does from continuing.
Mario Christodoulou is chief reporter of Accountancy Age