Institute of Chartered Accountants in England and Wales
(ICAEW) warns recent IFRS adoption
proposals by the Securities and Exchange Commission (SEC) are
“fraught with risks and drawbacks”.
The US SEC issued a recent publication, which
called for a staged transition process to incorporate IFRS into US
GAAP through a combination of convergence and endorsement, referred
to as “condorsement”, but the ICAEW recommends a simultaneous
transition to IFRS instead.
“Having seen how IFRS adoption worked for
listed companies in the UK and the rest of Europe, it seems clear
that the best strategy to minimise market disruption is a
simultaneous transition on a mandatory, well-publicised and certain
date,” ICAEW financial reporting faculty head Nigel Sleigh-Johnson
said.
The ICAEW also claim the SEC’s estimate of
five to seven years for the condorsement process is optimistic.
However, the institute is pleased that the
role of the Financial Accounting Standards Board was clarified by
SEC.
“The IFRS model works best when it is
underpinned by strong national standards setters in each
jurisdiction, which can contribute to and influence the work of the
International Accounting Standards Board. The UK ASB is a shining
example,” Sleigh-Johnson said.
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