GAAP threat to IAS

Link: IAS special report

The caution came this week after Phylon Fund Limited – an investment company listed on the Irish Stock Exchange, but domiciled in the Cayman Islands – issued a company announcement saying it was dropping IAS in favour of US GAAP.

‘The directors of Phylon Fund Limited wish to announce that they are changing from the use of international accounting standards to US GAAP,’ the company said in a statement. A spokesman for Phylon refused to comment, except to confirm it was not planning to de-list from the ISE.

Nigel Sleigh-Johnson, head of financial reporting at the ICAEW, described the move as a ‘worrying development’. ‘One of the great fears is that, if the uncertainty continues over whether Europe goes wholeheartedly with IAS, there may be lobbying to use US GAAP,’ he said.

Sleigh-Johnson said that anecdotal evidence suggested German-listed companies had also expressed disquiet over the continued uncertainty. ‘If we get to the point that Europe isn’t endorsing international standards, then the whole thing will be undermined. We could get concerted pressure from major European companies to use US GAAP instead.’ He added there was a ‘real risk’ of IAS being discredited.

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