It seems the fissures in the IASB-FASB relationship have continued to grow and risk becoming so fractured that the U.S. movement to IFRS may be put off indefinitely.
The latest salvo game from IASB chairman Hans Hoogervorst. His statement that the IASB has “broken deadlines so often that nobody believes in them anymore” seems to be purely a self assessment at first blush, but in standard setting, like politics, nothing is ever that simple. The IASB Chairman also referred to “dysfunctional working processes and dysfunctional decision making” in his recent self assessment of the IASB. Considering the FASB is part of that decision making process and the only standards singled out as issues where joint projects, one has to believe at least some of the criticism was squarely aimed at the FASB.
Mr. Hoogervoorst also laid down the gauntlet that the IASB would finish its conceptual framework project by September 2015. Given that aggressive time frame, it is clear the IASB won’t have time to work with the FASB on any convergence projects once the big three – revenue recognition, leases and financial instruments are complete. In fact, one has to wonder if the IASB will continue to work closely with the FASB to work out a single solution on those projects – in particular the leasing project – or if they will simply go their own what and effectively tell the FASB you can come along or not; we don’t care which you do.
And the IASB also seems to be getting the backing of the EU with comments from officials referring to stakeholders impressions that “we are going backwards” on accounting standards. The EU has even raised the idea of kicking the SEC off of the monitoring board providing oversight to the IASB. While that has not happened, if it ever does, it will be very interesting to see the SEC response. Given the SEC’s mandate through law about accounting standards, would the SEC be willing to continuing accepting financial statements based on accounting standards they have no oversight on whatsoever?
So it increasing looks like we may have a world of two or three (never count out the Chinese) major sets of accounting standards. A friend on mine from Canada mentioned this is increasing starting to look like the adoption of the metric system. The U.S. initially puts out plans to adopt the metric system, but never really gets on board with the rest of the world. That leaves business stuck in the middle dealing with users of both systems and muddling through as best they can.