FAF warns against written commitment to a single set of global accounting standards

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31 Dec 2012

The US Financial Accounting Foundation (FAF) has submitted a letter of comment to the IFRS Foundation on its Invitation to Comment 'Proposal to Establish an Accounting Standards Advisory Forum'. In the comment letter, the FAF warns that written commitment to a single set of global accounting standards will exclude many jurisdictions and with them some major players from the proposed new advisory body.

The FAF believes that the proposed Accounting Standards Advisory Forum (ASAF) would offer a good opportunity for sharing technical knowledge and strengthening the cooperation among accounting standard setters. The comment letter also suggests that the new forum would offer a valuable platform for exchanging views on potential agenda items, proposals and research not on the IASB's agenda which might foster convergence even further.

However, for the ASAF to achieve its objectives the FAF maintains the forum would need to include jurisdictions representing the world's major capital markets irrespective of whether they have already adopted IFRSs. Requiring members to sign a commitment to a single set of global accounting standards would exclude among others the United States, which has not yet decided on the adoption of IFRSs:

Requiring a written commitment to a single set of standards written by the IASB, in full and without modification, would exclude many jurisdictions from membership, including those where the standard setter does not have the final authority to adopt or endorse IFRS; those where IFRS has been adopted but has been modified; and those — including the United States — where no decision has been made regarding adoption or endorsement of IFRS. If an overarching goal of the ASAF will be to inform and improve IFRS for potential future use by such jurisdictions, we would encourage changes to the commitment that would allow the broadest possible participation in the ASAF process.

The FAF continues to see a single set of standards as "worthy objective", but for the forseeable future believes that it is more practical to aim for "highly comparable" standards.

Please click for the full comment letter on the FAF website.

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