US issuers should immediately be given the option to prepare financial statements using IFRS as issued by the IASB, in line with foreign issuers, says the Association of Chartered Certified Accountants (ACCA).
ACCA says in a letter recently addressed to the US Securities and Exchange Commission (SEC) that the adoption of common accounting standards is in line with the trend of globalisation in business and commerce, and will facilitate international trade and the transfer of skills.
ACCA’s letter, in response to an SEC Staff Paper, says that having an extended period for the convergence of IFRS (International Financial Reporting Standards) with US GAAP (Generally Accepted Accounting Principles) would be detrimental to the consistency of the treatment of US companies and foreign private issuers already reporting under IFRS.
"We strongly believe that IFRS are best positioned to become such global standards and in our view there should be an immediate option for some US issuers to prepare IFRS accounts using that common financial reporting language rather than in compliance with GAAP," says Richard Martin, head of financial reporting at ACCA.
This could either be a general option or might be restricted to those internationally focused companies who are in sectors where the majority of businesses with which investors are likely to be making comparisons are using IFRS, elaborates Martin.
Martin adds that such a move would both benefit issuers and capital markets as it would facilitate the comparability and transparency of reporting entities domiciled in different countries. This would also represent another important step towards the full incorporation of IFRS into the U.S. financial reporting system.
"We believe that the experience of most comparable cases is that preparers and investors prefer the ‘big bang’ approach. There should be a date, within a reasonable timeframe, for the ultimate objective of having the standards used by US companies being the same as IFRS as issued by IASB," says Martin.
Martin urges the FASB adopt unchanged and in a timely way new standards issued by the IASB, and aim to persuade IASB to amend IFRS rather than to make specific US adjustments.
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