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ACCA says in a letter recently addressed to the US SEC that the adoption of common accounting standards is in line with the trend of globalisation in business and commerce, and will facilitate international trade and the transfer of skills.
ACCA’s letter, in response to an SEC Staff Paper, says that having an extended period for the convergence of IFRS with US GAAP would be detrimental to the consistency of the treatment of US companies and foreign private issuers already reporting under IFRS.
Richard Martin, head of financial reporting at ACCA says: "Such a move would both benefit issuers and capital markets as it would facilitate the comparability and transparency of reporting entities domiciled in different countries. This would also represent another important step towards the full incorporation of IFRS into the US financial reporting system".
"For all other US issuers we think that the transitional arrangements and the convergence period of up to seven years proposed under the new approach should be reduced in order to avoid replacing existing sections of US GAAP with the equivalent IFRS on a piecemeal basis. A too long time span would risk creating greater complexity for preparers of GAAP financial statements, and the coherence and quality of the standards may also be impaired by unforeseen consequences and incompatibilities that might arise during this transition."
"We believe that the experience of most comparable cases is that preparers and investors prefer the ‘big bang’ approach. There should be a date, within a reasonable timeframe, for the ultimate objective of having the standards used by US companies being the same as IFRS as issued by IASB."
Richard Martin concludes: "On the endorsement framework issue, we are in general agreement with the SEC proposals on the continuing involvement of FASB and SEC, which should be entitled to retain the ultimate power to add or amend standards, albeit this should be limited to very exceptional circumstances. FASB should aim to adopt unchanged and in a timely way new standards issued by the IASB, and aim to persuade IASB to amend IFRS rather than to make specific US adjustments".
"The key factor which should guide the involvement of FASB in respect of amendments and adjustments should be that, at all times, US companies should be able to claim compliance with IFRS as issued by the IASB."