A new report from the Institute of Chartered Accountants in England and Wales urges the International Accounting Standards Board to “end the era of convergence,” and give all listed companies around the world the option of applying International Financial Reporting Standards.

The report, entitled “The Future of IFRS,” will be published Wednesday at the ICAEW Financial Reporting Faculty’s major IFRS conference in London. It outlines the progress made toward a global financial language, the barriers that remain, and recommendations for the future.

“All listed companies in major countries currently not part of the ‘IFRS family’ should be given the option of reporting under IFRS, including the United States,” said Dr. Nigel Sleigh-Johnson, head of ICAEW’s Financial Reporting Faculty, in a statement. “Governments should let the market speak. Companies should be permitted to assess for themselves whether the benefits of transition outweigh the costs”.

The report also addresses the convergence project between the IASB and the Financial Accounting Standards Board, proposing that this period, which dominated the last decade, come to an end, even without resolution in some key areas.

“The convergence project has brought international and U.S. standards much closer together,” Sleigh-Johnson stated. “However, the IASB should now focus squarely on the needs of countries that have adopted its standards and push ahead quickly with finalising its own requirements for, in particular, financial instruments and insurance contracts. It is better that the IASB and FASB boards issue separate standards than deliver unsatisfactory compromise solutions or do nothing at all.”

Sleigh-Johnson also commented on the need for institutional change within the IASB to protect the future of the IFRS project. “Managing the competing demands of its growing number of stakeholders without embedding operational inefficiencies will be immensely challenging,” he stated. “There is no well-tested model for standard-setting on a global scale. It will require a certain amount of organisational experimentation. The IASB needs to demonstrate that it listens and learns as well as leads.”

The report’s recommendations include:

• Innovating the IASB institution to become a truly global organization with decentralized responsibilities, and responsive to its national stakeholders without inefficiencies paralyzing effective decision-making.
• Ending IFRS and U.S. GAAP convergence in favor of focusing on significant improvement to IFRS requirements.
• Improving G20 leadership by urging the Group of Twenty finance ministers and central bank governors to end its calls for convergence and promote the IFRS.
• Getting regulators, including through the International Organization of Securities Commissions, to actively support the IASB.
• Shifting the goal of the IFRS project from complete global uniformity to ensuring that financial reporting enables international business and trade by addressing the needs of international investors and businesses.
• Minimizing complexity in the IASB standards so reporting requirements will not deter some countries from fully embracing IFRS standards. 
• Responding to shortcomings in the current suite of IFRS by calling for the IASB to finalize financial instruments accounting and focus on how company performance is reported.

When asked about the likelihood of the U.S. adopting IFRS, Sleigh-Johnson stated:  “In our view, retaining national GAAP in a world where almost everybody else reports under IFRS is likely to prove untenable.”

ICAEW is a professional membership organization of more than 138,000 chartered accountants around the world. “The Future of IFRS” report will be downloadable starting tomorrow online.