IFRS Gets Push from Accounting Giants

CEOs from Deloitte, E&Y, PwC, KPMG, Grant Thornton, and BDO Seidman speak of "overwhelming support" for international standards

The world’s six largest accounting firms are pushing for the adoption of International Financial Reporting Standards (IFRS).

Tuesday, top executives from Deloitte Touche Tohmatsu, Ernst & Young, PricewaterhouseCoopers, KPMG, Grant Thornton, and BDO Seidman published a paper asserting they have found “overwhelming support” for moving to a single, global set of high-quality accounting standards.

“It is our view that the move toward global adoption of IFRS as promulgated by the IASB (International Accounting Standards Board) must be continued, along with the global convergence of audit and independence standards,” the CEOs said in the paper, titled “Principles-Based Accounting Standards.”

The CEOs signing the report were PwC’s Global CEO Samuel A. DiPiazza Jr., KPMG International Chairman Timothy Flynn, Grant Thornton Chief Executive Worldwide David McDonnell, Deloitte CEO James H. Quigley, BDO International CEO Frans Samyn, and E&Y Chairman and CEO James S. Turley.

The white paper established a “framework for establishing principles-based accounting standards,” discussing six key elements: faithful presentation of economic relaity, responsiveness to needs for clarity and transparency, consistency with a clear conceptual framework, a basis in an “appropriately-defined scope that addresses a broad area of accounting,” clear and concise writing in plain language, and allowance for the use of “reasonable judgment.”

In its report on the eight-page white paper, presented at the Global Public Policy Symposium in New York, Reuters noted that more than 100 countries have already adopted or announced plans to adopt IFRS. Proponents assert that IFRS is more principles-based and more concise than U.S. Generally Accepted Accounting Principles, which rely on specific rules.

The accounting executives said that stakeholders prefer a principle-based standard as well as a globally consistent oversight and enforcement regime.

Back in November 2006, a “vision paper” asserted that the current financial reporting model is less relevant and needs to be overhauled, Reuters pointed out.

The SEC at that time announced that some non-U.S. companies no longer must reconcile their financials with U.S. GAAP, as long as they use International Financial Reporting Standards.

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