ICAEW backs IASB's global convergence project despite lack of a US decision on adoption of IFRS
HESITATION BY THE US over adopting IFRS is no reflection on the value of a global set of accounting standards, the ICAEW has said.
Nigel Sleigh-Johnson, head of ICAEW’s Financial Reporting Faculty, said the lack of a firm commitment by the US Securities and Exchange about if and when IFRS may be adopted should not come as a surprise.
“While the lack of a firm commitment from the SEC regarding if and when IFRS may be adopted in the United States is not ideal, establishing an international set of accounting standards is an aspiration that the G20 leaders continue to support,” Sleigh-Johnson said.
“The fact that the US is still hesitant about a radical shift away from its own high-quality standards should not be taken as any reflection on the suitability of IFRS reporting for other markets.”
Last week the SEC published its final staff report on IFRS, which pulled short of recommending a timetable for moving to adopt the global rules. The delay received a rebuke from Michael Prada, chairman of the trustees that oversee the IASB, who voiced frustration with the SEC’s stance.
“While recognising the right of the SEC to determine the method and timing for incorporation of IFRSs in the US, we regret that the staff report is not accompanied by a recommended action plan for the SEC,” Prada said.
The SEC also received criticism from Scott Saks, co-chairman of the international securities practice at global law firm Paul Hastings, who argued that US conversion to IFRS is far overdue and could reduce expenses at the largest global companies.
“It makes no sense that there is not a more immediate roadmap for the US to convert to IFRS as have most major economies,” Saks said. “Even our closest neighbour Canada has converted without issue and one could argue their GAAP is about as close to US GAAP as one could get,” he said.
“The one argument that the SEC makes is the cost on smaller issues, which could be easily addressed by allowing those companies that wish to convert immediately to do so, with a longer phase in for smaller companies.
“If anything, this would likely reduce expense at the largest global companies that are already using IFRS in their foreign operations and would not have a negative impact on investors as the SEC already allows all foreign private issuers to use IFRS without a US GAAP reconciliation and investors have not been harmed by that.”
Regardless of developments in the US, the ICAEW has urged the IASB to focus on the quality of its standards, helping countries with implementation challenges and “demonstrating beyond any credible challenge the value of a global set of financial reporting standards”.
The SEC staff report can be found here