View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
April 30, 2008

Convergence could present short-term benefits

By Nicholas Moody

Convergence could present short-term benefits

The convergence of rules-based and principles-based standards may potentially have a short-term benefit for a firm’s revenue but would require them to invest more in staff training, according to the global chief of a mid-tier network.

Baker Tilly International president Geoff Barnes made the comments following a panel discussion on the issue organised by the Institute of Chartered Accountants of Scotland and the European Federation of Accountants in Brussels this month.

He told IAB the revenue of accounting firms could initially increase if there were a transition to different accounting standards, but it would then tail off, much in the same fashion as the compliance work associated with the Sarbanes-Oxley Act.

Barnes said: “If there’s going to be a transition to different standards, people are going to need advice. And if people need that advice they are going to pay for that. We are seeing this globally with the introduction of IFRS where the Big Four all cited the introduction of those standards as a major contributor to an increase in their revenues in growth, but that’s not going to be around forever.

“Firms were doing very well giving good advice [on Sarbanes-Oxley] two or three years ago but that has eased off considerably as companies have got used to what they have to do. and I think the same will happen with principles and rules.”

Convergence costs Barnes believes the costs of conforming to converging standards will vary depending on the complexity and geographic spread of a client. “If you’ve got a number of groups of companies in a number of countries, each using different standards, then there will be more time and more effort in adjusting the figures to reflect IFRS,” he said.

The consensus of the Brussels panel discussion, Barnes said, was that the profession largely accepts principles-based standards but with “bells and whistles”. He added it was vital to have a consistent global view about which path to take on the issue.

Nicholas Moody

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A roundup of the latest news and analysis, sent every Wednesday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy


Thank you for subscribing to International Accounting Bulletin