Reasons to be cheerful
This is hardly the time of year to be despondent. But looking back over the last 12 months can we be anything else?
Increasingly the destiny of UK accountants appears to be in the hands of US regulators. More than anything – and certainly more than most senior partners are prepared to admit publicly – the fate of the Big Five rests with the SEC.
But despite US dominance on the global corporate, cultural and political stage, it is not all bad news for the UK and Europe.
If time in politics, markets and the internet has to be measured in dog years, for regulators the opposite has to be the case. And that’s why European companies have a great deal of work to do if they are to meet the European Commission’s deadline of 2005 for adopting international accounting standards.
But if the EC’s hopes that IASs will eventually be adopted by the US ring a little hollow today, they might well be right by 2005. The US position currently is very much like Henry Ford’s a century ago: overseas companies can adopt any standard they like to access US capital markets as long as it is US GAAP.
But that dominance could soon end. The US economic boom will probably end in the next year or two. Recession would make New York and Chicago less attractive for raising capital. And who would see the benefits? Europe, surely.
That scenario would strengthen the hand of European regulators in setting the rules – principally IASs. An encouraging prospect.