Regulators around the word, including the U.S. Securities and Exchange Commission, have recognized International Financial Reporting Standards as being a high quality, internationally accepted set of accounting standards. As countries around the world adopt IFRS, the argument for adoption of IFRSs in the U.S. seems to be shifting from which set of standards is the best, to the merits of global comparability of financial statements.
The more serious risk to adopting IFRS is not the quality of the standards, but the accountability and independence of the International Accounting Standards Board. The second milestone in the SEC’s roadmap discusses accountability. National accounting setters have traditionally been accountable to national regulators. In the U.S., the SEC oversees the Financial Accounting Foundation, parent of the FASB. Historically, the International Accounting Standards Committee Foundation has not had a similar link with national securities regulators.
The IASC Foundation Trustees have proposed amendments to its constitution that would create a Monitoring group composed of securities authorities. The Monitoring group will work with the IASC Foundation on oversight of the IASB and areas for consideration by the IASB in its ongoing work.
Even if a monitoring group is established, will an international accounting model be strong enough to fend off political pressure from governments around the world and are we in the U.S. ready to give up our direct regulator relationship with the accounting standards setter?
What is your opinion about the risk of an international accounting model?
