[ 2011-12-09 ]

US considers 'modified incorporation' of IFRS
US STANDARD SETTERS are calling for "modified
incorporation" of global accounting standards,
after national regulator the SEC said it needed
more time to decide on convergence.

Financial Accounting Standards Board chairman
Leslie Seidman said international standard setters
should be responsible for writing the rules used
by US companies, but the name US GAAP should not
change due to practical considerations.

Under her vision, the FASB would gather input and
research, while refraining from working on
standards being tackled by the IASB.

"In order to ultimately endorse a standard for
your country or region, you have to have been an
active participant in these processes yourself,"
Seidman continued.

Her speech came one day after SEC chief accountant
James Kroeker warned the regulator will miss its
deadline to decide on IFRS by the end of the
year.

The accountancy heavyweights were addressing the
American Institute of CPAs conference and Hans
Hoogervorst, chairman of the IASB, also commented
on the contentious process.

Hoogervorst again underlined the benefits of
globally comparable standards, tempering this with
a nod to the "challenges and significant pressures
facing the SEC in making its decision".

Hoogervorst and Seidman alike acknowledged the
original aim of complete convergence of IFRS and
US GAAP is increasingly remote.

Seidman said while joint work should continue on
priority projects such as revenue recognition, "we
do not believe indefinite convergence is a viable
option, politically or practically. As any
observer can see, this process is challenging
technically and administratively."

Hoogervorst said: "Our convergence history with
FASB has been extremely useful in getting us to a
point where IFRS and US GAAP are much improved and
closer together," but warned strongly against
accepting this status quo and allowing national
variations on IFRS, known as carve-outs.

Both standard setters made reference to future
institutional arrangements. One possibility is
that national bodies will be more engaged, a
suggestion from the US Financial Accounting
Federation that has received widespread support.

Assuring the US of the IASB's continued
commitment, Hoogervorst concluded: "There should
be a clear timeline for the completion of the
initial ‘endorsement process'. There should also
be a presumption that - given full due process and
extensive involvement of the national
standard-setter - non-endorsement would be very
rare indeed. Once the initial process of
endorsement is completed, US companies should be
able to assert compliance with both US GAAP and
IFRS."


US decision on IFRS delayed 'for at least a few
months'
London (UK) - 06 Dec 2011 – Accountancy Age -
THE US has delayed a decision on global accounting
standards until early next year at least, blaming
a packed agenda for the tardy announcement.

James Kroeker, chief accountant at US regulator
the SEC, told a conference hosted by US institute
the AICPA, but an official memo has not yet been
issued.

The SEC's original deadline was late 2011, but
international financial reporting standards have
proven incredibly divisive, with a huge number of
domestic companies up in arms about the perceived
cost and complexity of adopting the global
standards.

One US expert close to the regulator told
Accountancy Age he "wouldn't be surprised if the
SEC decided to let the deadline pass without
saying anything", but experts in the UK widely
expected some kind of announcement.

ACCA: IFRS gaining popularity
London (UK) – 12 Oct 2011 – Accountancy Age -
GLOBAL REPORTING STANDARDS are gaining popularity
among investors and finance executives, according
to a new report by ACCA.

Around 170 senior executives and investors were
questioned. More than 40% said international
financial reporting standards improve access to
capital, while around 25% believe the global
standards have lowered capital costs.

ACCA chief executive Helen Brand said: "Growing
support amongst CFOs and investors for [IFRS] must
be considered carefully" by US regulator the SEC
as it debates converging US GAAP with
international standards.

"We believe a positive answer from the SEC would
give a tremendous boost to the cause of financial
reporting and more importantly the world economy,"
she continued.

Just over half of respondents said the financial
crisis has improved their opinion of IFRS, while
60% view the standards as "facilitators of more
consistent regulation".

Brand continued: "I am pleased to see that key
stakeholders in the financial reporting process
such as investors and CFOs are increasingly
showing support for global accounting standards."

However, she warned the value of IFRS in terms of
facilitating cross-border comparison would be
compromised by excessive amendments at the
domestic level.

"It is essential that national policymakers resist
as far as possible the temptation to include
issues which may be important in their countries
but which, when aggregated, will threaten the
integrity of the international regime. Global
standards need to be just that - global."


The report comes shortly before the SEC is due to
decide whether it will adopt IFRS. Some
enthusiasts are calling for a 'big bang' approach
with large listed companies switching to global
standards as soon as possible.

However, critics favour a much slower approach and
the SEC has mooted "condorsement", a gradual
strategy whereby IFRS and US GAAP come together
through a mixture of convergence and endorsement.

Investors: IFRS unfit for purpose
London (UK) – 21 Sep 2011 – Accountancy Age -
INFLUENTIAL INVESTORS warned International
Financial Reporting Standards are "unfit for
purpose" in a straw poll at a recent corporate
governance event.

Attendees representing the investment industry
heard Ian Mackintosh, vice-chairman of standard
setter the IASB, sparring with Ernst & Young audit
partner Allister Wilson, during a discussion
workshop at the International Corporate Governance
Network's annual conference.


At the outset, opinion was divided as to whether
IFRS are fit for purpose, but chairman Liz Murrall
said by the end of the session, "the result swayed
more significantly into the no camp than it had
before".

Allister Wilson questioned whether
one-size-fits-all works when accounting standards
must fulfil such diverse purposes. These include
providing information on stewardship, governance
and sustainability issues, as well as to markets
and regulators.

Value creation was also scrutinised, with Wilson
asking what is meant by 'value' and what is
reported as 'performance'. He questioned the
effect of mark-to-market and mark-to-model asset
valuation, warning that unrealised value changes
might be recorded in the profit and loss account
and paid out in bank bonuses and dividends.

He called for a more detailed review of global
standards, saying the IASB's current agenda
consultation is acceptable, but more should be
done.

Ian Mackintosh called the IASB a success story,
saying global standards are now accepted in more
than 120 countries and high-profile non-signer the
US will make a decision later this year.

In a second straw poll, attendees were asked
whether IFRS were a contributory factor in the
build up to the financial crisis, to which the
vote was evenly split.

Source - Accountancy Age

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