US pins hopes on 2005
The convergence of US accounting practices with international standards will hinge on a successful introduction of IAS in Europe, according to Washington's most senior standard setter.
Link: IAS special report
Financial Accounting Standards Board chairman Robert Herz called the 2005 introduction of international standards for European Union-listed companies ‘the D-day of accounting’, and stated that future plans for convergence between FASB standards and those from the International Accounting Standards Board depended on how well Europe makes the switch.
Speaking at PricewaterhouseCoopers’ Meet the Experts conference in London this week, Herz said: ‘The success of 2005 is critical in my campaign to keep convergence going.
‘The introduction of international accounting standards in Europe is viewed as experimental and its success will further the momentum of our project.’
Herz, however, denied that the US board was holding back until it sees the outcome of the 2005 introduction.
‘Convergence is embedded in just about everything we do now,’ he said. ‘But it has to be about getting better standards for the capital market and not just convergence for its own sake.’
FASB is also expecting to encounter resistance from the US side with some of its forthcoming convergence projects.
In particular, Herz singled out the upcoming project on accounting changes, which he hopes will move towards the IASB model.
This will mean that any reform of accounting practice would require the re-production of the previous year’s figures to reflect the changes.
‘In the current climate anything that smacks of restatement sends people into a state of panic, so we expect some opposition,’ said Herz.