The Institute of Chartered Accountants in
England and Wales (ICAEW) has launched a new financial reporting
faculty at a time one industry expert has called a “death or glory”
period for international financial reporting.
At a formal launch event held in London last
month, several members of the new faculty’s high level advisory
group gave their predictions on the challenges ahead for financial
reporting in 2009-2010.
Advisory group member and UK Accounting
Standards Board chairman Ian Mackintosh told the event
international financial reporting is entering a “death or glory”
period and its future currently sits on a “knife edge”.
The chance for glory stems from the
opportunity to achieve, or take major steps towards, real global
financial reporting standards by 2011. But two major things have to
happen for this to be achieved, Mackintosh said. The US must agree
to continue with its road map to adopt IFRS and Europe must not
make any further carve-outs.
“Either of those could lead us to death,”
Mackintosh warned, speaking with The Accountant after the
event.
“If Europe carved out, didn’t adopt, or in any
way varied the standards, the US could say ‘these are not going to
be really global standards anyway so why would we want to join a
club like that’. But if [Europe] don’t and the US join, it will
have been a fantastic achievement, ‘glory’ as I called it, over a
10-year period by the existing [International Accounting Standards
Board – IASB].
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By GlobalData“I think it is a little bit of a knife edge. I
guess I would err on the optimistic.”
Political support
Mackintosh’s optimism stems partly
from the G20’s support for global standards and he said that
group’s April meeting in London will be critical.
The ASB chair is also relatively optimistic
about IFRS adoption in the US. He recently returned from the US,
where he met with Securities and Exchange Commission (SEC)
officials. The message he received was to not read too much into
the caution Mary Schapiro, the commission’s new chair, has shown
regarding IFRS.
“One danger in the US is the credit crunch and
the fact that the SEC has lots of other things on its plate related
to the credit crunch. That might tempt them to at least delay
adoption. That is the real danger I think,” he said.
The heart of the ICAEW’s new financial
reporting faculty is its website. Resources on the site include
fact sheets, an IFRS standards tracker and a blogging tool. ICAEW
financial reporting faculty head Nigel Sleigh-Johnson said the
on-line nature facilitates the faculty’s ambition to be truly
international.
The faculty morphed out of the institute’s
financial reporting committee, which remains the policy arm of the
ICAEW’s financial reporting offering.
Sleigh-Johnson said the new resource has come
late to the ICAEW’s “faculty party”.
There are already existing faculties for audit
and assurance, corporate finance, finance and management, financial
services, information technology and tax.
“There was the feeling when the faculties were
created that financial reporting was so core to what ICAEW members
do it wasn’t specialist enough,” Sleigh-Johnson said. “But
financial reporting has changed since then, becoming much more
complex and international – there is a need for more help and
guidance, a need for more practical assistance.”
One example of practical assistance that has
proven popular is the IFRS standards tracker.
“With all the amendments that go through it
has become quite critical to know which version of the standard
applies to the accounts at a particular time,” Sleigh-Johnson
explained.
Also key are fact sheets, which have added
depth by being electronically linked to relevant documents, for
example the UK Companies Act and UK or international standards.
Sleigh-Johnson points out that faculty members
can access the help of “real experts”. The faculty’s advisory
committee features such names as IASB vice chair Tom Jones, US
Financial Reporting Standards Board chair Robert Herz, EC director
Pierre Delsaux, European Financial Reporting Advisory Group chair
Stig Enevoldsen and IFAC SMP committee chair Sylvie Voghel.
The faculty chair is Deloitte partner and UK
ASB member Andy Simmonds.
The launch of the faculty is timely due to the
current situation with international financial reporting standards
and debates surrounding fair value measurement.
Sleigh-Johnson said it will also be an
interesting and challenging year in the UK, with the ASB set to
investigate the future use of UK GAAP for private companies and
not-for-profit entities.
