PracticeConsultingIASC sets the standards

IASC sets the standards

IASC has reached a major landmark in its drive to develop global accounting standards. Its core standards have been endorsed by IOSCO, the international organisation of securities regulators.

At its annual meeting in Sydney, IOSCO resolved that it recommends its members to permit incoming multinational issuers to use the IASC standards for cross-border offerings and listings. The core standards are all of IASC’s standards except for a few that have specialised application.

What does the endorsement decision mean for the future? All of IOSCO’s major members, except the US and Canada, already accept use of IASC’s standards in cross-border listings without any conditions. This position is not expected to change.

The IOSCO decision does not directly affect the position in the national jurisdictions of its members. Action by the SEC is needed before IASC’s standards can be given higher recognition in the United States. The SEC published a Concept Release about use of international standards in February and when the comments on this have been analysed, we shall learn more about the way forward. In the meantime, we can draw certain encouraging inferences.

We know that the SEC supported the IOSCO resolution. The resolution refers to the possibility that some administrations will require “reconciliation of certain items”. This seems to offer the prospect of a major step forward from the present position in the United States, in which a virtually complete reconciliation is required.

However, the IASC Board has proposed a restructuring of IASC that is the real key to future prospects. It will achieve the highest levels of independence in IASC’s decision making and create the possibility of an effective partnership with national standard setters to work on elimination of remaining differences between national and international standards. The final stage in approval of the restructuring is a vote of Members that will have taken place by the time this article is published. (It is on 24 May.) The proposals have been welcomed by the SEC. If the decision on endorsement by IOSCO is followed by final approval of the restructuring by IASC members, we shall be securely on the path to global accounting standards: there will be no turning back.

  • Sir Bryan Carsberg is secretary general of the International Accounting Standards Committee

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