This time last year, the convergence of IFRS and US GAAP appeared to be edging closer following the release of the US Securities and Exchange Commission’s draft road map. Twelve months on and an adoption date has faded from sight.
The standardisation of global accounting standards has been superseded by more pressing regulation problems brought on by the global financial crisis. Despite this, firm leaders believe IFRS convergence with US GAAP will come.
Grant Thornton International leader Ed Nusbaum lists the global adoption of IFRS as the greatest challenge in 2010.
“In 2009, a series of events related to the issue of market value assessments and valuation on assets impacted the global adoption of IFRS. I’m hoping in 2010 we see more progress towards the global adoption of IFRS and the convergence with US standards,” he says.
Baker Tilly International leader Geoff Barnes says despite the setbacks, his senior partners and the American Institute of Certified Public Accountants believe IFRS will be introduced in the US. This view is echoed by most firm leaders, who all agree on the importance of moving towards one global set of accounting standards.
“If you accept that all commerce is becoming global and connected, then it makes logical sense and it’s inevitable that we’ll have one set of rules,” says Ernst & Young global chief operating officer John Ferraro.
Ferraro says it’s not as if people do not believe in convergence, but issues do arise.
“I think the global fiscal crisis is a bump in the road and causes people sometimes to say, ‘well, are we really going to be connected? Is it helpful to be connected? Is it in our interest to be connected?’ The short answer is yes,” he adds.
“I think the need is obvious; but the momentum may slow sometimes.”
BDO International leader Jeremy Newman expects inspection regimes to toughen over 2010. Crowe Horwath International leader Frank Arford also predicts increased regulation, both for clients and firms.
Mazars leader Patrick de Cambourg is not certain this would be such a bad thing.
“I do not buy the argument that Europe would be in a bad position if it was a little more secure than other areas. I am not advocating super-regulation but I say we have to apply the G20 [directives],” de Cambourg says. “Investors want security. Without over-complicating things, we need to offer a more secure environment.”