I don’t know how much credibility to attach to the following reports from the UK’s GAAPweb.
The first, dated Monday, June 8, claims that sources close to EU politicians are suggesting that the EU have its own standard setting body. The second, has a brief recap of a meeting between Tweedie and Council of the EU, in which McGreevy claims that some EU politicians question if the IASB is out of touch.
In my opinion, in these reports, reporters are just message carriers. They reflect real political concern in Europe about the IASB. Since I’m not over there talking with politicians myself, I can’t judge how much juice these rumors have. There is enough smoke, however, to make me conclude that the EU dropping IFRS is a reasonable possibility. It is way too early to tell if it is probable.
The major factor working against the IASB is its independence. The EU wants the IASB to be independent of everyone but Europe. The EU wants the IASB to be subservient to Europe’s wishes. European politicians just have to be getting tired of lobbying in the financial press for certain provisions in IFRS. It would be much easier if Europe had a standard setting body that answered directly to Charlie McGreevy, Finance Minister. The result would be more acceptable standards and less debate in the public spotlight.
There have been other interesting things that have come out. Tom Selling has a very interesting blog post today, in To Catch a Chief Accountant, in which he confirms my suspicion that the tide has turned against IFRS in the US. If so, Charley Niemeier and Jack Ciesielski are more likely candidates than previously thought. I wonder, though, if Jane Adams is still the favorite. She doesn’t have the Big-4 ties, although she does have AICPA work. Her view on IFRS is completely unknown, as she has not spoken publicly about it.
The controversy over IFRS has both sides pushing with everything they have. The final decision will be political. I think it likely that the flexibility of IFRS principles/guidelines will largely be lost as a result of all the politics. Accounting standards will inevitably become more like hard and fast rules, the result of hard fought political compromises. Both sides (national GAAP vs. IFRS) will argue for clearly defined rules, to limit gains from the other side.
Debit and crecit – - David Albrecht