ICAEW: global accounting rules needed for financial crisis

The ICAEW institute has urged the US Securities and Exchange Commission to
decide quickly on a timetable for moving to International Financial Reporting
Standards in order to limit uncertainty for US companies.

In its submission to the US markets watchdog’s consultation on IFRS, Europe’s
largest professional accountancy body said the global financial crisis had
highlighted the need for global accounting rules.

Nigel Sleigh-Johnson, head of the ICAEW’s financial reporting faculty, said:
‘The close scrutiny of accounting for financial instruments during the financial
crisis has made the need for comparable financial reporting even more obvious.’

‘We believe strongly that the transition by US companies to IFRS would not
only benefit US companies, but the whole world, as it will improve transparency
and comparability globally.’

The comments come amid growing opposition to global accounting standards in
the US.

Earlier this month, Paul Boyle, chief executive of the UK’s chief financial
regulator, the Financial Reporting Council, said adoption of international
accounting standards for all listed US companies will not be achieved by 2014,
potentially threatening global convergence efforts.

The adoption of IFRS in the US will only succeed by educating people who use
and prepare company accounts, the ICAEW also said in its submission.

The ICAEW added: ‘We know from our 2007 study into IFRS implementation across
the EU that companies need a significant amount of time to prepare properly. A
2011 decision with potential mandatory use of IFRS from 2014 might be tight.’

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