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ICAEW issues report on the future of IFRS

  • ICAEW (Institute of Chartered Accountants in England and Wales) (lt green) Image

12 Dec 2012

The Institute of Chartered Accountants in England and Wales (ICAEW) has published a report 'The Future of IFRS' urging the IASB to end its convergence project with the United States' Financial Accounting Standards Board (FASB) and refocus its attention on the jurisdictions that have already adopted IFRS.

The 28-page report discusses the benefits of a global set of standards and assesses the state of IFRS now, ten years after launching the project. The report also controversially calls for an end to the formal convergence projects between the IASB and FASB within months, not years.

Convergence has served its purpose, and there is little desire on either side to continue with it. For existing projects, the IASB should only proceed to a converged solution where that is attainable in the short term, and without jeopardising the quality of the outcome. . . . In our view, it is much better henceforth that the two boards go ahead and issue their own separate, distinct standards — aligned where possible — rather than muddle through and issue a weakened compromise solution, or simply do nothing.

The ICAEW believes that the IASB should continue to work with the FASB — ensuring that the US is still represented on the Monitoring Board, as Trustees and as IASB Board members — but the IASB should not put reaching an agreement with the United States ahead of developing timely, quality solutions and improvements to international standards that are "urgently needed" for the many other jurisdictions that have already adopted IFRS.

Perhaps now is the time for the IASB to focus its attention squarely on the needs of the 100 plus jurisdictions that to some degree have officially adopted its standards, and who currently do not always feel that their voices are adequately heard, and on working to encourage those countries that have moved their standards close to IFRS — notably China — to take the final steps towards full IFRS reporting.

The ICAEW report also presents many recommendations for the future success of the IASB and IFRS, including:

  • Calling on the G20 to (1) adopt IFRS or align their domestic standards as closely as possible, (2) allow optional use of IFRS in their capital markets by all listed companies, and (3) take on their proportionate shares of funding the IFRS Foundation.
  • Establishing a dedicated research capacity and an effective feedback mechanism to issue standards that are widely accepted and can cope with the different and evolving business models and economic systems that exist around the world.
  • Develop a strategy for enforcing standards — calling on regulators around the world to work more closely together to ensure enforcement is consistent.

The ICAEW's full report, The Future of IFRS, is available on the ICAEW website.

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