Magazine article The CPA Journal

Is America Walking Yet?

Magazine article The CPA Journal

Is America Walking Yet?

Article excerpt

The first panel discussion at the April 30, 2009 Pace University Lubin Forum on Contemporary Accounting Issues centered on whether it is in investors' best interest for the United States to adopt IFRS or converge U.S. GAAP with international standards, as well as what the timing of such a move should be. The panel was moderated by CPA Journal Editor-in-Chief Mary-Jo Kranacher.

Cost-Benefit Considerations

The benefits of moving to IFRS were espoused by Christopher Craig, audit partner at Grant Thornton. "First and foremost, the continuity from market to market, from country to country, that IFRS offers is tremendous." he said. "It's going to encourage investors to look outside their borders and invest in U.S. companies."

Wendy M. Hambleton. partner and national SEC director at BDO Seidman, argued that IFRS has the potential for greater clarity. "Under IFRS. it's a lot harder to do something and not have to disclose it," she said. "You may actually be able to see more clearly that somebody was or was not trying to meet an accounting objective."

On the other hand, Richard A. Fuchs, partner in accounting advisory and financial reporting at PricewaterhouseCoopers. questioned whether it's in investors' best interest to be subject to continuous change in how financials are reported over the next few years. But he said that companies should have the freedom to decide how they want to report. "If there are companies out there that believe there is a benefit that the investment they have to make is worthwhile, they should have the opportunity to do so," he said.

Danita K. Ostling, partner and Americas IFRS leader at Ernst & Young, emphasized me costs of not moving to IFRS. "If 10 or 15 years down the road the rest of the capital markets around the world have all gone to this international standard and we are the outlier, I think there is a significant cost to that" she said.

Convergence and Conformity

Much discussion was devoted to two possible paths to IFRS: conversion, a fullscale adoption of the international standards, or convergence, a gradual aligning of U.S. GAAP with IFRS. D.J. Gannon, national leadership partner in the IFRS Center of Excellence at Deloitte & Touche, expressed doubt about the efficacy of the latter. "It's pretty clear that convergence has not resulted in the same standards," he said. "The notion that we can just converge standards was a great one 10 years ago. But now I think we're in a very different environment, and I think we're seeing that politically that's not tenable anymore."

Panelists also warned against the United States developing its own brand of IFRS. Fuchs used Australia as an example. "Australia started off with a version of GAAP equal to IFRS, but somewhat more restrictive," he said. "The Australian standards setters have started to pull back from that saying, 'Why do we want to hold ourselves to this more restrictive standard, when our companies are competing with everyone else in the world for capital?'"

Ostling agreed. "We want to have a single set of standards that everyone can use," she said. "If we started having countryspecific versions, then we're not going to achieve that objective."

Several panelists said the move to one set of standards should proceed, regardless of the downturn in the economy. …

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