Like it or lump it, the IASB is unstoppable

While accounting standards converge across the globe, standard setters, users and finance directors (FDs) are increasingly talking a different language at cross purposes to each other.
The International Accounting Standards Board (IASB) has one overriding aim. It wants to see most of the world’s economies using international accounting standards.
The board, led by Sir David Tweedie, believes the US could move away from US generally accepted accounting principles (Gapp), which is now crumbling under its own weight; and with India, China, Canada and Japan recent converts to the IASB’s cause, it seems the bandwagon is unstoppable.
But while the IASB appears to be in sight of the winning line, instead of enjoying well-deserved plaudits, it faces mounting criticism from financial directors (FDs) of some of the world’s largest firms.
Without an accepted conceptual framework, it is suggested radical changes cannot be made to standards. And there is deep scepticism over the balance sheet approach to measuring financial performance.
So with standard setters relentlessly pursing one course, FDs losing faith and users bemused, they are all playing a pass-the-parcel blame game. All three stakeholders see financial statements as complex, compliance based, balance sheet focused, carrying unrealised profit and excessive, worthless disclosures.
Standard setters, preparers and users agree on the problems, but there is no meeting of minds on the causes or the solutions.
But the IASB cannot halt the juggernaut it has started with the blessing of capital markets, governments and regulators. The advantages of lower cost of capital and cross-border investor confidence
in published numbers in different jurisdictions are a prize many seek.
Financial reporting could be on a course that many see as deeply unsatisfactory, but there is no
realistic prospect of diverting it.
Peter Williams is a chartered accountant and freelance journalist