'Flawed' map threatens convergence

The Hundred Group of Finance Directors has said that the international
standards setter’s approach to standards convergence with its US counterpart is
‘flawed’.

Tomkins finance director Ken Lever, who is chairman of the Hundred Group’s
financial reporting committee, made the comment at a roundtable on the moves.

‘You wouldn’t try to set out on a journey without a map, and yet that appears
to be what is actually intended by the conceptual framework,’ Lever told an
audience of senior industry figures.

The International Accounting
Standards Board (IASB) and the Financial
Accounting Standards Board (FASB) have drafted a ‘roadmap’ to converging
international and US standards in the form of the conceptual framework.

The Tomkins FD did not spare his words as he addressed delegates at the
event, which was hosted by John Pierce, chairman of the Quoted Companies
Alliance.

He warned against convergence that would go down the route of a
reconciliation to US GAAP. ‘One of the reasons why convergence has been put
forward as a sort of holy grail is that countries like China and India do have
the choice as to which stock exchanges they might want to list on. And, of
course, one of the aspects of this is that they don’t want to be in a position
where they have to reconcile IFRS to US GAAP.

‘Whether we like it or not, the companies of the future and many of the big
corporations will be out of India and China.

‘Of course, we would rather they listed in somewhere like London, but it does
take their choice away if there is a need for this reconciliation, because they
don’t want to be in the business of doing reconciliations.’

Lever conceded that standards setters should only be viewed as thought
leaders. ‘It shouldn’t really be on them to give the highest priority to this
and present us with a complete set of joined-up proposals or a map before we
actually begin the journey.’