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