Turning a key is an easy concept to grasp. You turn a key and something, be it a door, a box or a safe, unlocks. But unlocking IFRS and allowing it to become the truly global set of accounting standards is much more difficult especially when, as IFRS legend Sir David Tweedie pointed out this month, the US has the key.
If the financial crisis did not happen we more than likely would have had a decision from the US Securities and Exchange Commission (SEC) by now. But we need to face up to the fact that it did happen and continuing to put off the decision is stopping the accounting profession from becoming the first truly global financial service as well as making business on the international stage more difficult and time consuming through a lack of financial comparability.
Other distractions in the US, the Dodd-Frank Act for example, have kept the US from a decision and now with the presidential election cycle in full swing I’m predicting another delay in the decision-making process.
Tweedie’s comment was made at a joint Institute of Chartered Accountants of Scotland and American Institute of Certified Public Accountants panel discussion where he was joined by two other former standard setters: Bob Herz, former chair of the US Financial Accounting Standards Board, and Paul Cherry, former chair of the Canadian Accounting Standards Board.
Herz is in agreement that the time has come for the SEC to be given more clarity on where the US is going.
I’m becoming a little concerned that we (the rest of the world) are now playing a sort of cat and mouse game with the US.
So I ask – at what point will a decision come? Will it be when the International Accounting Standards Board stands up and says enough is enough – either the US makes its decision or leaves the board?
As Cherry pointed out, while there were some speed bumps in Canada’s adoption of IFRS the world did not come to an end and he is adamant doing away with US GAAP was the right decision for the business community.
The only averse reason for the IASB to be concerned with making as strong a stand as that is other large economies like China and Japan following suit and a decade of hard work from the board unravelling.
I don’t think we need to get too anxious just yet but let’s hope the US decision comes before the year is out.
For more comments from Tweedie about his career, the challenges of IFRS today and, believe it or not, his toy train read our exclusive interview with him in full – Leaving a legacy.
A fresh look
I hope you like this edition of The Accountant it’s a new, invigorated look for the magazine, which you might agree makes it look a bit sexier.
The great heavyweight accounting content covering news, profiles of inspirational/influential leaders, features and analysis on topical accounting issues, and country reports on important accounting economies around the world will remain but now with a bit more colour, more graphical data and more pictures to wet your whistle.