FSA launches attack on convergence efforts

The Financial Services
has delivered a scathing attack on convergence efforts, casting
doubt on the financial merit of the activities.

The watchdog detailed its concerns in its Financial Risk Outlook paper which
addressed the development of accounting standards to achieve a greater level of
uniformity in the future.

On plans to narrow the gap between International Financial Reporting
Standards and their US equivalents, the report said: ‘Across all stakeholder
groups in the UK (companies, auditors, investors and regulators) there is
growing concern that the costs of convergence may outweigh the benefits being

The report continued: ‘In particular, there is a view that a converged set of
accounting standards that is acceptable to the (US) Securities and Exchange
Commission will need to be more like US GAAP and more detailed and prescriptive
than current IFRS.’

The IASB, at the
forefront of convergence efforts was also singled out in the report. In
response, chairman Sir David Tweedie, told the
FT: ‘ When you write a
risk assessment you have to put these things in,’ Asked about a suggestion the
costs and results of convergence could, if things go badly, be ‘negative’ for
the UK, he said: ‘I obviously totally disagree. We’re getting the gold standard.
It’s plus, plus, plus.’

Further reading:

Anger as FSA bumps up member fees

Companies go to extreme lengths to escape US laws 

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