ICAEW Requests IASB for Ending Convergence
A recent report created by the ICAEW requests the IASB to end the convergence era and provide all the listed entities across the globe with an option of using IFRS. The report lays down the advancements made in the direction of global finance related language, the blockages that exist and future recommendations.
Nigel Sleigh-Johnson, head of Institute of Chartered Accountants in England and Wales, Financial Reporting Faculty, stated that all the listed entities in leading nations, which at present aren’t a part of the family of IFRS, should be provided with an option of reporting as per the International Financial Reporting Standards, in addition to the United States.
Johnson also clarified that the governments must allow the market to speak. Entities should be granted the permission to assess on their own whether the transition related advantages outweigh costs or not.
The report addresses the convergence related project (between the FASB and IASB) as well, and has proposed that this particular period that dominated the last ten year, should end despite the fact that resolution has not been achieved in some prominent areas.
Johnson pointed out that the convergence related project has brought the United States and International standards very close to each other. But the International Accounting Standards Board must now give more emphasis to the requirements of the nations, which have adopted the standards and move ahead in the direction of finalizing its very own needs for, especially, finance related instruments and insurance based contracts. Johnson also stated that it would have been better if the FASB and IASB issues separate principles/standards instead of delivering compromise based solutions that are not satisfying at all.
Johnson also shared his opinions on the requirement for an institution based change within the International Accounting Standards Board to safeguard the IFRS project’s future. The report recommends the following:
· Innovation of the International Accounting Standards Board institution, to transform into a completely global entity with responsibilities that are decentralized and respond to its national stakeholders and not allow inadequacies to paralyze efficient decision making.
· Ending GAAP and IFRS for the purpose of focusing on major improvements for the purpose of incorporating them in IFRS.
· Improvising on G20 leadership by seeking assistance from the finance minister of Group of Twenty as well as governors of central bank for ending the convergence related calls and promoting the IFRS.