The International Accounting Standards Board (IASB) should change its strategy from an emphasis on convergence and concentrate exclusively on major improvements and simplifications in IFRS over the medium term, according to Europe’s largest accounting body and the head of the UK accounting regulator.
The Federation of European Accountants (Fédération des Experts comptables Européens – FEE) said although the IASB’s convergence strategy has delivered good results since the standard-setter was created in 2000, many countries have now either adopted IFRS in full or have substantially reduced the differences between IFRS and their national standards.
“FEE believes, however, that we are now in a period of diminished returns from further convergence due to the rapid increase in complexity, without hardly any additional benefit to investors that arises when seeking to eliminate increasingly smaller differences between IFRS and other standards,” FEE said.
FEE Financial Reporting Policy Group chairman Mark Vaessen said developing new standards and making improvements to existing standards should be guided by a work plan that sets clear priorities and that justifies the need for changes.
“Although there should be continuous improvement of standards, improvements made must be measured in cost-benefit terms. In other words, improvements should be made only in areas that really matter,” he added.
UK Financial Reporting Council chief executive Paul Boyle echoed FEE’s sentiments at the regulator’s annual open meeting this month.
“We have concerns about the future direction of IFRS,” Boyle said.
“We believe that the IASB’s objective should be to improve IFRS and should not include reference to convergence with particular national standards. It is not clear to us that convergence between IFRS and US GAAP is the best strategy for improving IFRS.”