US adoption of IFRS seems a distant dream, which makes the few remaining IASB and FASB convergence projects more important than ever.
Demonstrating how far the use of IFRS has extended, IASB chairman Hans Hoogervorst shared with Meet the Experts delegates a map showing the 100+ countries that are already applying the standards. The slide showed an ‘IFRS world’ that spans Europe, most of Australasia and the Americas - “apart,” as Mr Hoogervorst put it, “from that country between Canada and Mexico”.
Efforts of IFRS adoption in the US have stalled, and while Mr Hoogervorst remains optimistic for the simple reason that he “can’t see the US remaining as one of the few countries outside of our family”, others have less hope. The view of Wayne Carnall, PwC partner and former Chief Accountant of the SEC’s Division of Corporation Finance, is that adoption was unlikely unless two seemingly insurmountable obstacles can be overcome: the fact that the US likes to set its own standards; and that hardly anyone in the US wants IFRS.
But while US adoption has stumbled, convergence of IFRS and US GAAP has moved on for a number of joint projects. Many of the projects identified in the convergence roadmap have been completed – some remarkably successfully, others less so. The soon-to-be published joint Revenue Recognition standard is proof that near-perfect convergence is possible; however, other projects (notably impairment) have been, to put it politely, less triumphant. There comes a point where attempts to reach a converged solution impedes progress, and Mr Hoogervorst hinted that the IASB is reaching this point with its Impairment proposals. The board believes that its own model works – and a consensus is building that the IASB should move ahead on its own rather than wait for the FASB to make up its mind.
Convergence is a goal well worth striving for. Revenue Recognition – described as “the jewel in the crown of convergence” by Mr Hoogervorst – will improve the comparability of accounts, and we applaud the boards’ work; what a shame that some of the other projects could not emulate it.