The US shift to IFRS has been given a major boost by President Barack Obama’s proposed overhaul of the US financial regulatory system.
The US Treasury proposals, A New Foundation: Rebuilding Financial Supervision and Regulation, recommend the Financial Accounting Standards Board, International Accounting Standards Board (IASB) and US Securities and Exchange Commission make substantial progress towards a single set of high quality global accounting standards by the end of this year.
There were two other proposals on how accounting standards should be improved.
The first was that accounting standard setters clarify and make the application of fair value accounting standards consistent, including the impairment of financial instruments, by the end of 2009.
This is a project the IASB has committed to.
The Treasury also recommended accounting standard setters improve accounting standards for loan loss provisioning by the end of 2009, making the standards more forward looking to combat issues of procyclicality.
It noted that the transparency of financial statements must not be compromised in this process.
The US Chamber of Commerce expressed disappointment with the plan, saying it unnecessarily added new layers of regulation without providing comprehensive reform to the current broken system.
The International Federation of Accountants (IFAC) applauded the call by the US President for urgent progress toward a single set of high-quality global accounting standards.
“The President’s acknowledgment of the importance of developing a high-quality set of global accounting standards reflects the importance of global standards and a level playing field in financial reporting,” IFAC chief executive Ian Ball said.