LONDON Oct 23 A decade-long drive backed by
world leaders to align accounting rules could go into reverse if
the United States balks at adopting global standards, a top
The G20 group of top economies called in 2009 at the height
of the financial crisis for a single set of global accounting
rules to improve transparency for investors.
But differences between the International Accounting
Standards Board (IASB) and the U.S. Financial Accounting
Standards Board (FASB) pushed the initial 2011 target back to
2013. And in its latest communiques, the G20 has dropped all
mention of a date and only states the need for common rules.
The two sides have been holding meetings for a decade to try
to align their rules, but have become bogged down in
disagreements, in particular over how to force banks to
recognise losses earlier on bad loans.
This was a key G20 demand to stop banks leaving it too late
and in extreme cases needing taxpayer bailouts.
"There is a risk that, in the absence of a U.S. decision on
adoption, a decade of convergence may be followed by a new
period of divergence," said the IASB staff report released on
Tuesday in response to a July U.S. announcement.
The report responds point by point to issues raised by the
U.S. authorities, which said in July that full adoption of the
IASB's rules known as IFRSs had little support and they would
stick to requiring generally accepted accounting principles or
"While acknowledging the challenges, the analysis ... shows
that there are no insurmountable obstacles for adoption of IFRSs
by the United States," IASB Trustees Chairman Michel Prada said.
The United States is well placed to achieve a successful
transition to IFRSs and complete the objective repeatedly
confirmed by the G20 leaders, Prada added.
The IASB report said it was important to consider whether
the existing level of alignment can be maintained as both boards
plan future workloads.
IASB Chairman Hans Hoogervorst has expressed frustration at
how convergence has slowed and wants to move beyond the
seemingly permanent joint meetings with the Americans.
Countries such as Japan, Singapore and India are watching to
see what the United States decides before fully adopting IFRSs
themselves. Over 100 countries use IFRS and many believe it's
now time for some of their issues to be debated.
The IASB report seeks to ease U.S. concerns about loss of
regulatory sovereignty, saying enforcement would remain the sole
responsibility of the U.S. Securities and Exchange Commission.
But it dismissed one option aired in the United States, that
of adopting IFRSs rule by rule rather than all in one go.
Accounting industry officials don't expect the SEC to
revisit IFRS adoption until at least next year when its top
officials will have been replaced in the wake of next month's
U.S. presidential election.