Lost sight of in the SEC push to adopt IFRS is the primary reason for adopting it. In “IFRS Is for Criminals,” Ed Ketz and Anthony Catanach of Grumpy Old Accountants remind us.
In their essay, the grumpies let it all hang out:
But worst of all, IFRS is an elixir for unscrupulous managers. These imps will be able to skim assets from their firms and cover their tracks with such ease that critics could compare it to the artistry of Humphrey Bogart and Bette Davis. The world of accounting and finance would give way to theater.
It is not enough for principles to be better than rules. Principles-based accounting produces value only when managers and their advisers are principled men and women. Unfortunately, the past decade contradicts such a presumption.
Impressed by their words, I must agree. I checked with Sam Antar, a former master corporate criminal and a convicted felon. Sam now spends his time in the fight against corporate fraud.
I added the following reply to Ed and Anthony’s post:
Hi Ed and Anthony,
I like this post, it’s a return to the good old days of slapping those who advocate IFRS.
I don’t think people remember the bad old days of opinion shopping (APB days and early FASB). Corps wanted to report favorable numbers resulting from manipulation, and they would fire difficult auditors and hire more compliant auditors if there was much static at all.
Corps had easy accounting rules and easy auditors. Lusting after audit fees, auditors got very easy, even slutty, in the 1990s and early 2000s. I can’t believe the PCAOB is trying to force corps to shop for more favorable auditors every five years. What’s not to like if you’re a corp c(r)ook?
Yes, IFRS is for crooks. And the SEC is crook friendly. It must be, or else there wouldn’t be a call to hire former SEC accountants after they have put in their years and want to cash out.
Debit and credit – - David Albrecht