The International Accounting Harmonization: Are we There Yet?

Author:Aura GIURCĂNEANU

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Keywords:accounting, International Financial Standards (IFRS), International Accounting Standards Board (IASB), US SEC (US Securities and Exchange Commission), the EC (European Commission), Japanese FSA (Japanese Financial Services Agency), IOSCO (International Organization of Securities Commissions), accountancy profession

Abstract:
Accounting issues rarely exercise the minds of politicians, but the harmonisation of International Financial Reporting Standards (IFRS) is an initiative that has made them sit up and take notice.\r\nThe long-term work carried out by the International Accounting Standards Board (IASB) to create a single set of global accounting standards has attracted fiery debate over the years. The near collapse of the banking system in 2008 brought added stridency to the arguments. In over a decade of activity, the harmonisation project has featured rewrites, opt-outs and cross-border wrangles. The aim of international harmonisation – a set of high quality standards that would enable accounts to be understood in any country, increasing transparency and bringing down the cost of capital – is still regarded as laudable, but consensus as to content still seems far from certain.\r\nThe IASB is set up to ensure that it remains independent, with trustees to appoint board members, to establish criteria for board membership and to deal with the funding. The trustees are in turn accountable to a monitoring board of public authorities, including the US SEC, the EC, the Japanese FSA and IOSCO. Whilst some would like to rein in the IASB’s independence and put it more under political control, the accountancy profession and business community do not want that to happen. While they may disagree on technical matters, the business and accounting world still champions the way the IASB is set up.\r\n\r\n

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