PCOAB chairman outburst against IFRS

With the SEC showing the intent and FASB frevently working on the convergence of the United States to the IFRS. PCOAB chairman Charles Niemeier objected to the convergence. Niemeir is one of the key people who was instrumental in laying out guidelines on SOX, and feels that SOX have had a key role in improving the quality of the financial statements in a big way.

In a statement which was delivered to the press he said; The proposed switch could squander comparability among U.S. financial statements, and hurt the ability of regulators and auditors to do their jobs.

'IFRS has the potential to de-link us from our regulatory model. "All research shows that the U.S. is unique in its regulation. No [country] is as effective . . . . We have the lowest cost of capital in the world. Do we really want to give that up?"

He further expressed that moving into IFRS could unwind all the good work done on the US markets post ENRON and send US many light years away.

Niemeier said the idea that IFRS will solve problems with the current U.S. financial reporting system is also a myth, and that those problems exist primarily because the United States has stopped dealing with them. "We are not addressing the problems by moving to IFRS." To deal with accounting problems, he said, "we need to face them head on. Moving to IFRS is an exit strategy, but it's not taking us where we need to go.

In a similar vein, Niemeier challenged the assertion that IFRS will be good for investors. "It's a great selling point if you are marketing something to say that IFRS is good for investors," said Niemeier, but that in fact, it might undermine the regulatory protections that U.S. investors currently enjoy.

Well on a personal note, I do agree with the US regulator, as USGAAP has undergone many evolutions stemming from experiences of frauds, investor relations, complex financial instruments, something which the London based IFRS is yet to evolve into. Maybe, the FASB should strive to rework its accounting pronouncements to make them simpler and more objective, this would definitely help in saving the legacy , knowledge and the huge learning’s of USGAAP, which otherwise will become a chapter in history books.