• Register
Return to: Home > News > Tax > Firm leaders disappointed over endorsement delays

Firm leaders disappointed over endorsement delays

  • Author: Nicholas Moody and Carolyn Canham
  • Published: 15 Dec 2009
  • Email
  • Print

The US Securities and Exchange Commission (SEC) could say ‘no’ to converging with IFRS next month, as Europe’s non-endorsement of IFRS 9 fans US uncertainties about the International Accounting Standards Board (IASB), according to an IFRS expert.

Ernst & Young Global IFRS leader Ruth Picker warned that the US shift to IFRS and a move to one global standard is at a crucial tipping point that could see a possible reversion to national GAAP across the globe.

“The US is watching what is happening in Europe and this non-endorsement of IFRS 9 is another thing that they could point at to say ‘this world isn’t for us’,” Picker said.

“They could use what has happened in Europe to say, ‘we’re not going to go with IFRS’. I don’t think it will be that negative but it will be going through people’s minds.”

A stand-off looms?

Pressure has been building for the past six months as a stand-off ferments between Europeans unhappy at increasing US influence over the IASB and US uncertainty about the board’s political independence.

Earlier this month, SEC chief accountant James Kroeker said the US regulator would give a clearer picture of its proposed roadmap for the adoption of IFRS by US public companies by 21 December.

The IASB released its updated standard on financial instruments on 12 November, the first part in an urgent three-phase project to overhaul controversial accounting rules for financial instruments.

Following the publication, the European Commission (EC) said it would not fast track the endorsement of the standard despite being one of the key proponents of the IASB’s move to fast-track key parts of the convergence project.

Grant Thornton US chief executive Edward Nusbaum said political influence in international standard-setting does have an impact on US concerns about the IASB, but he believes the US is still committed to move towards international standards.

“It is hard to tell whether this delay from the EC will have any impact on the thinking of the SEC, but I think the SEC is pretty independently minded and they will do everything they think is right, which I think will continue to push towards global accounting standards,” Nusbaum said. “We were all disappointed to see the delay, especially after it seemed like the IASB had factored in the concerns of the EC. I think the bottom line message from me, from a US perspective, but also from a global perspective, is we need to keep politics out of standard-setting.”

Andrew Vials, the head of KPMG UK’s professional practice group, is also disappointed the EC did not fast-track endorsement.

“I don’t know how many companies outside Europe are planning to early adopt IFRS 9, but you could argue that at the moment it is not a level playing field between Europe and the rest of the world, so that is disappointing,” Vials said.

Delays unsurprising

PricewaterhouseCoopers UK head of public policy and regulatory affairs Pauline Wallace was not surprised EC endorsement of IFRS 9 was not fast tracked.

The EC is currently in a transition period, with a new set of commissioners due to take office early next year.

“It would have been very difficult to have persuaded a retiring commissioner and a commission staff who are not sure where they are going to be next year to take a decision that was going to be controversial with some member states,” Wallace said.

“To be fair to the commission, they made it very clear all the way through that they would only proceed with early endorsement if there was unanimous support for the standard and clearly they did not have that.”

Stakeholders will look with interest to see how the EC endorsement process progresses next year. It could happen on a stage-by-stage basis or the EC could wait until the impairment and hedge accounting phases are completed.

In the words of Wallace, “it will be an interesting year”.

Top Content

    Blockchain and the Big Four: does it deserve all the hype?

    Although still in its infancy, blockchain is one of the most talked-about technologies of 2018. Will the blockchain bubble burst, or will it live up to its reputation as the ‘new internet’? Eleanor Jerome investigates

    read more

    Malaysia: Ready to show its strength

    Recent changes have enhanced the quality of audit reports in Malaysia, giving the profession a welcome opportunity to demonstrate its value to clients. Paul Golden reports

    read more

    China: Regulating the Chinese dragon

    Harsh regulatory actions and looming US trade wars have been dampening expectations in a Chinese market still full of potential, finds Jonathan Minter

    read more

    Indigenous Australians: New checks and balances

    With fewer than 40 known qualified Indigenous Australian accountants, Jonathan Minter speaks to Shelley Cable from PwC Australia about how increasing this number is an important part of improving the financial literacy of Indigenous communities

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.