Standard setters disagree with
PwC GAAP proposal

Foreign private investors (FPI)
filing with the US Securities and Exchange Commission (SEC) should
be allowed to reconcile any comprehensive basis of GAAP with IFRS
as adopted by the International Accounting Standards Board (IASB),
according to PricewaterhouseCoopers US (PwC).

FPIs currently have two options for filing with the SEC – either
with US GAAP, or with any comprehensive basis of GAAP reconciled to
US GAAP. The SEC has recently proposed a third way – IFRS as
adopted by the IASB.

PwC SEC-FPI services group senior technical partner Wayne Carnall
spoke of the PwC recommendation at the firm’s Meet the Experts
event in London this month. Carnall said PwC welcomes the SEC
proposal, but believes it would have limited effect because of the
variances of IFRS worldwide.

Carnall said PwC’s suggested fourth filing option would mean that
companies from countries that have local variations of IFRS would
have either no reconciliation or easier reconciliation than they
would have under US GAAP. He stressed the importance of making the
US capital markets more welcoming, highlighting a decline in the
number of European investors, which fell from 379 in 2001 to 223 in

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Opposition to PwC proposal

US Financial Accounting Standards Board chairman Bob Herz and IASB
member Warren McGregor were strongly against the PwC proposal,
suggesting it would hinder the conversion process.

Herz, speaking at Meet the Experts, said: “Personally, I think that
[removing reconciliation with US GAAP] is the right method; to do
otherwise would be to undercut the IASB.” He also suggested the US
should set a timetable for adopting IFRS.

McGregor said PwC’s proposal would be counter-productive and could
jeopardise the aim for a single set of global standards.

However, Carnall is not convinced people in the US want conversion,
using the analogy of people perceiving themselves as under attack
from “alien” Europeans.