IASB's Hoogervorst: SEC's IFRS Decision Cannot Be 'Convergence By Another Name'

Building on an earlier speech delivered in Melbourne, Australia in November, in which he called upon the U.S. Securities and Exchange Commission to provide more 'clarity' on its impending IFRS decision, adding that that "convergence ...has served its purpose, but now it is time to move on," the Chairman of the IASB, Hans Hoogervorst, told an AICPA conference yesterday that, "I’m sure the SEC realises that the outcome of its decision cannot be convergence by another name."

In my view (please see disclaimer on the right side of this blog), Hoogervorst's warning against 'convergence by another name' was a veiled reference to the 'condorsement' approach - a blending of 'convergence' and 'endorsement,' as first defined in a speech by SEC Deputy Chief Accountant Paul Beswick in Beswick's remarks at a previous AICPA conference one year ago, incorporated into the SEC Staff Paper circulated for public comment in May of this year.

Hoogervorst indirectly broke down 'condorsement' into its two components, (without explicitly referring to 'condorsement'), giving props to 'endorsement' of IFRS by national standard-setters for use in their own jurisdictions - a process he noted is in place in 'most other parts of the world' - while reiterating that, "Our convergence history with FASB has been extremely useful in getting us to a point where IFRS and US GAAP are much improved and closer together...But for the long-term, the status quo is an unstable way of decision making"- [i.e. with two separate boards continuously working on ongoing convergence] - "that inevitably leads to diverged solutions or sub-optimal outcomes."

Read about the 'key characteristics' suggested by the IASB Chairman for the path forward on potential incorporation of IFRS in the U.S., and other highlights from his speech - including his thoughts on the future role of FASB vis-a-vis the IASB, here.

 

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FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI

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