15th July 2010:

Too soon to slow convergence further

Regular readers of my blog may recall that I gave a qualified welcome to the announcement in early June by the IASB (who set IFRS) and the FASB (the US accounting standard setter) that they were modifying their approach to give additional time to stakeholders to consider proposals and give feedback, with the timetable for the completion of certain projects being moved from 30 June to 31 December 2011.  I believed then, as I do now, that, although the IASB and (in particular) the FASB are being ambitious and that some of the projects are controversial, the changes in timing should hopefully be sufficient to enable the new standards to be developed in a suitably considered way.

I think it is unfortunate therefore that there are now some calling for a further slowing of the pace of accounting standard setting by the IASB and FASB.  The arguments set out are not unfamiliar, focusing on the limited amount of time that will be available to the accounting standard setters to develop robust proposals and give full and proper consideration to comments received, and for constituents to be able to provide the right level of input.  It is noted that both the extent of regulatory change and the effects of the global recession are adding to difficulties for constituents.  There is also an overall reference to the need to take sufficient time to develop high quality accounting standards, a sentiment with which I agree.
It is also worth considering the implications of substantial changes that will take place in 2011 to the membership of the IASB, which include the replacement of Sir David Tweedie as his second term comes to an end.  While this is not a reason in itself to continue to a specific deadline, it is the case that a further relaxation of the timetable could result in the issue of certain significant new accounting standards being substantially delayed, due to the need for new Board members to be fully brought up to speed.

Therefore, while I have sympathy with those calling for a further revision of the convergence timetable (and I have particular sympathy for preparers of accounts), I do think that it is premature to be calling for further changes in timetable at this stage.  It is right to keep the position under review but I believe that the revised approach set out last month should be achievable and that a further change at this stage might damage the credibility of any timetable.  Unless the standard setters remain ambitious and focused on driving through much needed changes and improvements, we could all be left waiting too long.

 Standards & Regulators  0 Comments July 15th, 2010