Speaking at the IAS Committee conference in Brussels this week, the head of financial reporting and accounting at Swiss pharmaceutical Novartis, Malcolm Cheethan, spoke out against the US regulator.
‘We thought the whole US GAAP business was a waste of time. It did nothing for shareholders, nor did it alter our share price. We would welcome it if the US would accept IASs without reconciliation,’ he said.
Cheethan was referring to Novartis’ obligation to reconcile its financial accounts with US GAAP in order to achieve a US listing. Novartis uses global accounting standards.
‘We all now know the SEC is not prepared to accept materiality issues. It is difficult to move the SEC to higher planes and get them to understand the bigger issues,’ he said.
According to Cheethan, who said the company had conducted a large amount of research in to the process of listing in the US, Novartis had to redo most of its financial statements.
‘It went against all the guidance we had received from our auditors PricewaterhouseCoopers,’ he said.
Cheethan said the company share price was not affected despite its reported equity being much higher using US GAAP
But, head of corporate governance at Merrill Lynch Mercury Asset Management, Tom Oats, countered Cheethan’s remarks.
‘It seems to me between the IASC and SEC they are doing a very good job. As a shareholder, I welcome disclosure. People do need disclosure,’ he said.
In 1995 most countries agreed to recognise international accounting standards except Canada the United States and Japan.
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