Financial Accounting Standards Board chairman Leslie Seidman and International Accounting Standards Board chairman Hans Hoogervorst appeared side by side at an American Institute of CPAs conference in early December to discuss what went awry in U.S. support for International Financial Reporting Standards.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
"Over 100 countries now use IFRS, including three quarters of the G20," said Hoogervorst at the AICPA Conference on Current SEC and PCAOB Developments in Washington, D.C. "Of course, there is one country sandwiched between Mexico and Canada that has yet to commit."
Seidman countered that U.S. preparers require detailed guidance on applying standards, while the principles-based standards of IFRS are often open to interpretation.
Hoogervorst noted that when the IASB and FASB established the convergence process in 2002, IFRS was considered by many to be a bilateral project between Europe and the U.S. "Today, the standard-setting environment looks different," he said. "Many emerging economies driving global growth are supporting IFRS. Understandably, they want a seat at the table of accounting standard-setting. We are seeing the emergence of regional accounting standard-setting forums in Asia and Latin America to complement that of Europe."
"The uncertainty about where the SEC is going to land is not a helpful backdrop for our work on the remaining convergence projects," he said. "Already, on some issues it is getting increasingly hard to find common solutions. If we cannot achieve converged outcomes within a convergence programme, then how will we maintain convergence once the program has ended? The risk of increasing divergence will be enormous. What a waste that would be."
Seidman countered that the U.S. needs clear and unambiguous standards. "The United States is a heavily regulated marketplace for public companies and their auditors," she added. "We have quarterly reporting requirements and short timeframes in which to close the books. All of that has implications for what types of standards will work here."
Hoogervorst expressed his fears that there would be divergence. "After a decade of progress, after tireless and sometimes painful work by the boards to bring about convergence between IFRS and U.S. GAAP, ... many people around the world expect a clearer perspective of this country's intentions with IFRS," he said. "That is why we really need a tangible sign of continued U.S. commitment to a single set of global standards."