Landmark moves last week towards a viable set of international accounting standards could be blown out of the water if the US Securities and Exchange Commission and the European Union decide to cherry pick individual standards to suit their needs.
The fears have surfaced ahead of today’s meeting in Edinburgh of frustrated senior representatives of the UK profession.
The International Federation of Accountants conference will look at ways of preserving the breakthrough agreement made by the international stock market regulators’ club, IOSCO, in Sydney last week at which it endorsed international accounting standards.
In the wake of IOSCO’s announcement, the SEC issued a statement questioning their acceptability, increasing fears that they want to impose US standards on the world. And there are new fears that the European Union could also block the moves.
Differences in accounting standards can wipe millions of pounds off corporate profits. Last week the Phoenix consortium that bought Rover said the ailing car company was not losing nearly as much as the £2m a day shown under German standards.
Graham Ward, who becomes English ICA president next month, said: ‘The SEC should not seek to use points to establish barriers to the global acceptance of standards developed by the IAS committee, which should be implemented as they stand throughout the world.’
The row stems from a clause in IOSCO’s endorsement of IASs that allows domestic regulators freedom to demand extra information. The SEC and the EU are currently debating whether to incorporate the new standards in an undiluted form.
Ward, who flew to the US at the weekend to discuss the situation with SEC representatives, told Accountancy Age that the good effects of the Iosco endorsement could be diluted if the SEC and EU do not adhere to the new standards.
He said: ‘There is a danger that we could end up with three sets of standards. There is then a further danger that this could snowball with other countries following suit.’ KPMG’s Ted Awty, head of assurance, echoed the frustration. ‘We are disappointed that IOSCO did not feel able to recommend acceptance of international standards without certain reconciliations.
IASs are already accepted in most countries of the world without provision of extra information. A decision from the SEC or EU is not expected for some time yet.
IASC members approve restructuring