I had thought that for this week's blog I would shift away from IFRS, but during my search for a new and interesting international topic, I found a dissenting view of IFRS to those I have previously found. And so, despite my thoughts of new topics, this week I will instead present the argument for IFRS.
In the article, International Adoption Issues: A View From the IASB, Patricia McConnell lays out the different types of acceptance of IFRS as well as explains why it should be adopted. Her differing ideas stem from her work with the International Accounting Standards Committee (IASC) since the 1980's and as a financial analyst for Bear Stearns. She has spent a great deal of her 40 year career as a Certified Public Accountant (CPA) viewing the accounting world through investor-tinted glasses.
McConnell lays out a lot of information we have already heard or discussed. She believes that a "high-quality global financial reporting standards are essential for the transparency an comparability that is critically important to the effective functioning of today's global capital markets." Which is, as stated in previous articles, the reason that IFRS should not be a pipe dream.
She also goes on to state that despite the stereotype, the International Accounting Standards Board (IASB) is not a British organization. Instead it consists of 15 members from 12 countries, and 1/4 of the members, trustees and technical staff are American. Unfortunately, whether or not IASB is a multi-cultural organization was never in question by its opponents.
She believes that IFRS will result in a common financial reporting language that will improve transparency and enable investors to make comparisons among similar entities across jurisdictions. Several more times throughout her commentary she describes how IFRS will help investors. Miller and Bahnson in their article however pointed out that for many countries investors aren't the point of financial accounting. Never once does McConnell address the cultural diversity issues that IFRS must overcome for the implementation she so strongly desires.
She also does not mention that recently the IASB has begun to appoint politicians, not accountants, to its regulatory board. In the end her article discusses how the world should be with a global policy for investors without ever once discussing who is going to make sure that each country is giving IFRS its due diligence and ensuring it is implemented the same throughout various nations with various cultural perceptions of the purpose of financial reporting.
These are the issues with IFRS, not its base premise, a global financial standard. In the end she simply reiterates the hope and promise of what IFRS could be and disappointingly never addresses how, other than people adopting it, IFRS is to be maintained or regulated, or any other opposing arguments.
McConnell, Patricia. "International adoption issues: a view from the IASB." The CPA Journal 81.12 (2011): 6+. General OneFile. Web. 27 Feb. 2012