IFRS in Perspective

I'm interrupting my "Single Sandbox" series of posts to direct your attention to an opinion piece I wrote on the SEC's February 24, 2010 announcement regarding IFRS and convergence. You'll find it at http://www.accountingweb.com/topic/cfo/opinion-sec-ifrs-support-not-all-its-cracked-be.

Within the context of this blog, I'd say the SEC has developed the right plan to answer the wrong question.

Thanks for reading - stay tuned as my series resumes shortly.

This blog post is the second of a series that explains the rationale for the United States and other countries to collaborate in creating a single, global registry of financial reporting standards rather than a single set of standards emanating from a single standard-setter. In my last post, I explained how the "single-sandbox" approach would significantly enhance the comparability of financial statements prepared in accordance with registered financial reporting standards without imposing a one-size-fits-all solution on reporting entities. In this post, I'll explain four ways in which the single-sandbox approach would drive non-value-adding costs out of the financial reporting supply chain.

I previously suggested in this blog that the Financial Accounting Standards Board (FASB), International Accounting Standards Board (IASB), and other standard-setters throughout the world should establish a single, global registry of financial reporting standards. The fundamental premise of my suggestion is that having a global registry would accelerate the elimination of differences in financial reporting standards among countries while maximizing the benefits that we would derive from more-similar standards, without expecting anyone to give up quality, sovereignty, or anything else they're reluctant to give up. This post is the first of many that will describe why a "single sandbox" approach makes more sense than expecting the whole world to agree on a single set of standards or a single standard-setter.

As I've discussed in my previous posts, anyone who's asking whether the United States should stick with current U.S. Generally Accepted Accounting Principles (GAAP) or switch to current International Financial Reporting Standards (IFRS) is asking the wrong question. That's because we have more and better options to choose from in determining the future of financial reporting in the United States. In this post, I'll describe another alternative for us to consider—a realistic, practical approach that has a better chance of maximizing the economic welfare of both the United States and the rest of the world.

As I noted in my last post, it's difficult to argue that there should be any material differences in the portrayal of the same economic situation among reporting entities in different countries. Consequently, for general-purpose financial reporting, it makes sense for similar reporting entities throughout the world to use the same set of high-quality standards. But having researched this situation for years, one thing is clear to me: neither U.S. GAAP nor International Financial Reporting Standards (IFRS) are feasible candidates for the single, global set of standards that would most benefit individuals, companies, and countries.