London leery of opposition to IFRSBy Alain Thériault | January 28 2014 06:28PM
The International Accounting Standards Board (IASB) is concerned about rebellions against IFRS around the globe, and many jurisdictions’ decision to cherrypick the standards.FRS Foundation Trustees president Michel Prada fears a bandwagon effect if the largest countries blatantly pick and choose from among IFRS standards. “If some jurisdictions – particularly the larger ones – go back to the à la carte model then we should not be surprised that others will follow,” he said in a speech in November.
He cited the United States and its Financial Accounting Standards Board (FASB), which decided to go its own way. Canadian regulatory back offices are weighing the option of moving toward the FASB standards, which are better suited to long-term insurance contracts.
Ironically, European countries have also reserved the right to choose the IFRS that suits them best. Canada is one of the rare countries to have agreed to introduce them as a whole.
“There are some voices in favour of a sort of decentralized process by which national regulators would work together with a view to either converge towards international standards, or not, according to so-called national specificities and interests. They would then choose whether or not to adapt their national standards accordingly. This would be a most regrettable step backwards,” Mr. Prada says.
Prada adds that adhesion to the IFRS has grown considerably in the last five years, including in Canada. “Just in the past five years alone, over 25 countries have joined the IFRS family by requiring IFRS for all or most listed companies. These include Argentina, Brazil, Canada, Chile, Israel, Korea, Mexico, Russia, Taiwan and Ukraine,” he points out.
Later in his speech, he admitted that progress was slow in the United States despite the Securities and Exchange Commission’s (SEC) support for the IFRS proposal.
For years, the IASB has butted heads with the FASB, its U.S. equivalent. The two organizations have met many times to discuss the standards. They finally agreed to disagree, sources say. The FASB’s position has remained firm: the U.S. will develop its own system of standards while ensuring some correspondence with those of the IASB.