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Interconnected markets need global standards: Hoogervorst

International Accounting Standards Board (IASB) chairman Hans Hoogervorst has said without one single accounting language consistency in a globalised market will “always remain an illusion”.

Hoogervorst, who was addressing the issue of convergence between US GAAP and IFRS during the American Institute of Certified Public Accountants conference on current Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board developments, said “the emergence of interconnected financial markets explains the momentum gathering behind the move to global accounting standards”.

“Investors need comparable, reliable financial reporting around the world. For global investor protection, we need a global accounting language” he added.

Hoogervoost also pointed out that in the past five years IFRS have been adopted by most Latin American countries as well as Canada, Korea and Singapore among others and that for emerging markets, IFRS has become the “de facto financial reporting standard”, while countries that have yet to adopt it are looking at what is happening in the US.

He noted that large US companies, such as car manufacturers Ford and Chrysler, are also supportive of convergence “I think providing a limited number of such US companies with the option to use IFRSs for their US consolidated financial reporting would offer a good test of IFRSs”.

Hoogervoost said while he recognises the challenges and significant pressures facing the SEC in making its decision from an investor protection and capital formation standpoint “the SEC must believe that this is the right decision for the US…I believe it is”.

“The US is the largest and most liquid national capital market in the world. So, transitional concerns have to be carefully considered…[but] US investors now seek and should seek investment returns on a global basis” Hogervorst said.

 

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