RSS feedsWhile accounting standards converge across the globe, standard setters, users
and finance directors (FDs) are increasingly talking a different language at
cross purposes to each other.
The
International
Accounting Standards Board (IASB) has one overriding aim. It wants to see
most of the world’s economies using international accounting standards.
The board, led by Sir David Tweedie, believes the US could move away from US
generally accepted accounting principles (Gapp), which is now crumbling under
its own weight; and with India, China, Canada and Japan recent converts to the
IASB’s cause, it seems the bandwagon is unstoppable.
But while the IASB appears to be in sight of the winning line, instead of
enjoying well-deserved plaudits, it faces mounting criticism from financial
directors (FDs) of some of the world’s largest firms.
Without an accepted conceptual framework, it is suggested radical changes cannot
be made to standards. And there is deep scepticism over the balance sheet
approach to measuring financial performance.
So with standard setters relentlessly pursing one course, FDs losing faith and
users bemused, they are all playing a pass-the-parcel blame game. All three
stakeholders see financial statements as complex, compliance based, balance
sheet focused, carrying unrealised profit and excessive, worthless disclosures.
Standard setters, preparers and users agree on the problems, but there is no
meeting of minds on the causes or the solutions.
But the IASB cannot halt the juggernaut it has started with the blessing of
capital markets, governments and regulators. The advantages of lower cost of
capital and cross-border investor confidence
in published numbers in different jurisdictions are a prize many seek.
Financial reporting could be on a course that many see as deeply unsatisfactory,
but there is no
realistic prospect of diverting it.
Peter Williams is a chartered accountant and freelance journalist
