In the midst of growing tension between competing sets of accounting standards, chief financial officers at four out of five European business say unequivocally that IASs offer similar quality to US GAAP but at a much lower implementation cost.
Mark Vaessen, IAS advisory services partner with KPMG, who carried out the survey, said: ‘Choosing a new financial reporting language is a strategic decision. In making a choice between different sets of GAAP, various factors need to be considered, including regulatory developments and the preferences of investors and analysts, as well as more pragmatic issues such as implementation costs and internal reporting impact.
Accountancy bodies across the world give the appearence of converging on a common set of standards, but many in the profession believe the US is holding out against using IAS because it believes its own are far more rigorous.
Adopting US standards might open the door to new markets for European business but it appears set on holding out for IAS despite that.
Many national regulators already allow foreign companies to file financial statements in accordance with IAS or US GAAP. Some countries even allow domestic companies to pick and choose their accounting standards.
With this diverse environment governments across Europe are in the process of deciding to implement just one of the standards whether it be domestic GAAP, IASs or US.
Vaessen said: ‘A majority of all respondents contemplating a change are considering adopting IASs, while another 29% are considering US GAAP.
‘The result underlines the urgent need for globally accepted financial reporting standards.’
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