The lengthy stalemate in the creation of international accounting standards may finally be coming to a close, as Securities and Exchange Commission chairman Arthur Levitt says he will oversee a nominating committee that will select 19 trustees to supervise a revamped international rule-making group.
A persistent lack of progress on the issue of international accounting standards can be laid to a long-standing dispute between parties in the United States that want the U.S. rules to be the standards and business interests in other parts of the developing world that think the U.S. standards are “too ambitious,” reports Richard Murray, director of Legal and Regulatory Affairs at Deloitte Touche Tohmatsu U.S., in New York. The debate had bogged down, until the competing interests agreed to restructure the International Accounting Standards Committee late last year, Murray says.
Any company’s CFO should welcome an international accounting standards change, because it will eliminate one additional tier of regulation, adds George Brode Jr., a corporate tax attorney in Chicago and author of Tax Planning for Corporate Acquisitions. Brode says that different accounting standards in the United States and in foreign countries make it more difficult for U.S. companies to acquire abroad.
Global accounting standards began about 25 years ago under the aegis of the large accounting firms. Little progress was made until the Asian economic crisis in the late 1990s, when the financial markets recognized that companies–and whole economies–paid a steep price for the lack of harmonization among accounting standards, says Murray.