FASB chair: US ‘unlikely’ to adopt IFRS
Despite efforts to converge accounting standards worldwide, the US is unlikely to ever adopt international financial reporting standards, FASB chairman Russell Golden predicted.
The US is not likely to adopt international accounting standards -- which the majority of the world’s countries follow -- as its own, the chairman of the Financial Accounting Standards Board (FASB), Russell Golden, said in a letter to FASB stakeholders.
For over 10 years the markets have been anticipating a decision from the US Securities and Exchange Commission (SEC) on the call to adopt international financial reporting standards (IFRS) for US issuers.
Proponents of “accounting convergence” argue that a shared set of global accounting rules makes it easier for CFOs and dealmakers to read and understand financial statements across borders. Critics argue that the US has a litigious culture that principle-based international standards don’t account for well enough compared to the more precise US GAAP, and are further concerned about the time and costs involved in US businesses having to learn a new set of accounting rules.
In a speech this May, SEC chief accountant James Schnurr said that “there is virtually no support to have the SEC mandate IFRS for all registrants” and that “there is little support for the SEC to provide an option allowing domestic companies to prepare their financial statements under IFRS.”
In a letter to FASB stakeholders, Golden said he agreed with that assessment.
Golden wrote: “Perhaps the most important driver of this development is the increased recognition among US stakeholders that legal, regulatory and cultural differences among and between jurisdictions are likely to result in at least some variation in the way that accounting standards are written, applied in practice and enforced. In short, it has become clear that one size does not fit all.”
The remarks follow a letter written by a group of US lawmakers to SEC chair Mary Jo White warning that the convergence project could create a “two-GAAP environment, enabling accounting arbitrage” and that introducing IFRS in the US would place “standard setting with a foreign institution, beyond the purview of domestic regulators.”
The Congressional Caucus on CPAs and Accountants, which includes 10 members in the House of Representatives and 2 members of the Senate, wrote the letter in reaction to White saying that incorporating IFRS into the US financial reporting system was one of her top priorities.
FASB will continue to work with other standard setters “with the goal of reducing differences among accounting standards around the world, all the while making sure that we first consider the best interest of those who participate in US capital markets or who rely on the use of GAAP as established by the FASBoutside the United States,” wrote Golden in his letter.
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