In yesterday’s Accountancy Age appeared an interesting piece by IFRS reporter-advocate Mario Christodoulou, “The long and winding roadmap”. He does an adequate job, I think, even if he didn’t quote any of the many things I’ve said about U.S. adoption of or conversion with IFRS.
His quotation of fellow blogger Tom Selling statement of the differences between the GAAP and IFRS positions is priceless,
“Not only were Kroeker’s and Niemeier’s positions as different as black and white… Niemeier’s inspiration clearly sprang from a foundation of cited broad-based analyses produced by published rigorous, peer-reviewed, independent research. The source of Kroeker’s remarks apparently came from nothing more than his own wishful thinking,” prominent blogger Tom Selling said in September last year.
I recall thinking at the time his statement was something that I very well might have written, had Tom not said it first. There is every sound reason for the U.S. to retain its GAAP. Reasons for switching to IFRS are specious, sophist all the way.
Christodoulou goes on to say that the push for IFRS has too much momentum for the U.S. to continue to buck the trend. He might very well be right, but I’ll continue fighting it never-the-less.
Regardless, isn’t it time that someone came up with some good reasons for the U.S. to switch to IFRS? No one has ever stated one. Not that one is absolutely needed, because when governments decide to do something no good reason is needed. I mean, didn’t Ben Bernanke say this week that the multi-billion USD bailout didn’t actually cost a single cent? So, in government speak, Kroeker’s reason for moving to IFRS–for enhanced comparability–isn’t that bad. Of course, it is a false reason and no on in the world truly believes it. It is nonsensical.
And, governments frequently make bad decisions when it come time to regulate some aspect of society. In deed, governments in North America are more likely to get something wrong than right.
But as I say, isn’t it about time that we had some real reasons for moving the U.S. to IFRS (convergence accomplishes pretty much the same thing as a switch-over)? I have studied this topic for a few years. Researching government regulation of accounting and auditing is what I do. So far, I know of two reasons for the U.S. to switch to IFRS:
- Large audit firms hope to realize in excess of $100 billion in fees from services related to the switch over. This represents a wealth transfer from stockholders.
- Europe hopes that when investors can compare U.S. and European companies using IFRS-generated statements, they will decide to move upwards of a couple trillion USD from the U.S. to Europe.
I am aware of no other benefits to any other identifiable party for the U.S. switching from GAAP to IFRS. Shouldn’t there be some high-minded benefits from putting out so many millions of Americans and taxing the U.S. economy by a couple trillion dollars? I just don’t think that putting money in audit-partner pockets so they can buy luxury goods, or whatever, is a good enough reason.
So come on, all of you pro-IFRS folks. Kroeker has never come up with a reason for why the U.S. can make a change. Please leave a comment and help us all out. A good reason, or two, would make us all feel better.
Debit and credit – - David Albrecht
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