American standard setters have admitted that there are still obstacles to be overcome as part of the country’s drive to converge US GAAP with international accounting standards.
Speaking at the ICAEW’s annual Brussel’s conference, Gary Michael Crooch (right), board member of the US’s Financial Accounting Standards Board, said the most optimistic thing he could say about convergence was that it ‘wasn’t easy’.
In remarks likely to dishearten supporters of convergence, Crooch said that being the first to attempt the project meant the US had encountered difficulties. ‘We are in fact committed to convergence, but my best message is that convergence isn’t easy,’ said Crooch. He went on to explain that while disagreements do occur ‘we are going to have to find a way to overcome them. We are the first ones that have tried to do this, and we have stumbled some.’
He added that the US was taking a ‘three-pronged approach’ of improvement, simplification and convergence of its accounting standards.
During last week’s gathering, standard setters from around the world pledged to ‘reduce differences’ between financial statements as the harmonisation of global accounting standards headed the conference agenda.
Convergence with US GAAP remains the holy grail for standards setters but a process of ‘reducing differences’ with IFRS is the priority for the time being rather than full-blown convergence.
‘If we can just hit the really big differences that worry the investors and kill them that would be a start,’ said Sir David Tweedie, chairman of the International Accounting standards Board.
Almost 100 countries now permit or require international financial reporting standards to be used, but standard setters across the world are determined to increase this number further, while reducing differences with local accounting principles in ‘third party’ countries.
Sir David emphasised that, along with the 94 countries that permit or allow IFRS, Japan, Canada and the US were all working to reduce divergence between their own accounting principles and IFRS, and he hoped China would do so ‘within the next five years’.
Toru Shikibu, deputy commissioner at the Japanese Financial Services Agency, said the issue could become political, however. ‘In Japan there is a tremendous effort being made to improve accounting standards to good quality global standards,’ he said.
Japan has been working hard to meet the Committee of European Securities Regulators’ drive for equivalence between third-party country GAAP. Shikibu said that he would like the efforts of Japanese standards setters to be ‘received seriously’.
Graham Ward, president of the International Federation of Accountants, said that convergence to international standards was ‘vital to our economic stability’ and to have a ‘duplicity’ of accounting standards would be ‘against the public interest’.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements