Thursday, July 15, 2010

Acknowledging the Obvious? US Adoption of IFRS Called “Highly Uncertain"

The newly appointed chairman of the IASB trustee group has stated that US adoption of IFRS is “highly uncertain” and furthermore, that the survival of the International Accounting Standards Board may be at stake.

Padoa-Schioppa stated that the IASB’s US convergence program may end in disappointment because of the uncertainty over US adoption.

Schioppa also noted that intervention by European governments is also a threat to IFRS/IASB because political disagreements over adoption of standards in individual countries could end up with EU governments withholding funding from the IASB.

An example of the above is the delayed implementation of IFRS 9, relating to fair values of financial instruments, which was adopted virtually everywhere but Europe.
The IASB’s funding also remains an ongoing issue. Revenues dropped last year due in part to poor foreign exchange rates but also because some US private contributors themselves faced financial difficulties.

Schioppa will conduct a review of the IASB’s scope, process, governance and financing.