The next 18 months will likely determine
whether efforts to unify accounting standards worldwide will
succeed or fail, according to Bruegel senior fellow Nicolas
Véron.

Commenting in French paper La
Tribune
, Veron said accounting is currently at a critical
juncture as the financial crisis has threatened the prospects of a
smooth harmonisation between IFRS and US GAAP.

Véron said the possibility of convergence
between IFRS and US standards was dealt a big setback in July 2009,
when the International Accounting Standards Board (IASB) and the US
Financial Accounting Standards Board published diverging blueprints
on the key issue of financial instruments accounting.

“Meanwhile, for the first time, senior
European policymakers started to suggest that the EU should take
back its accounting sovereignty, and set its own standards rather
than entrust them to the IASB,” Véron said.

Véron said there are some suggestions for a
continuing to push for completion of the current IFRS/US GAAP
convergence programme by mid-2011, following advice from the Big
Four global audit networks and G20 leaders last year.

But Véron said it is more likely the political
tensions around IFRS will reach a breaking point, leaving the IFRS
Foundation (formerly known as the IASC Foundation) unable to
prevent wide deviations from IFRS in different economic
regions.

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“The backlash could even be such that the
foundation could not survive as an independent organisation. The
IFRS experiment could end in failure, even though the idea of a
single global accounting language may later be revived in a
different form,” Véron said.

Véron said the IFRS Foundation can enhance its
chances of success by a leadership renewal at its top, by more
clarity of purpose and accountability to IFRS users.

“At stake is more than accounting: IFRS is
arguably the most advanced effort to build a seamlessly integrated
market through a unified global code,” Véron said.

“If this effort fails, the consequences should
be of concern not only of dour accountants, but as well to all
those who care about the future of globalisation.”