Until he stepped down last year, Tom Jones was the only person who had ever served as vice chairman of the International Accounting Standards Board. But as director of the Center for the Study of International Accounting Standards at New York’s Pace University, Jones continues to promote international financial reporting standards. Thanks in part to his efforts, which began when the IASB was formed in 2001, at least 120 countries currently use or are contemplating using some form of IFRS.
Jones will deliver a keynote address about the future of accounting next week at the CFO Rising West Conference, to be held October 24-27 in Las Vegas. Having served more than 20 years as a senior finance executive at Citibank, including a stint as the bank’s CFO, Jones has dealt with accounting rules both as a preparer and a standard-setter, giving him a unique point of view on some of today’s most contentious issues.
In an interview with CFO, Jones spoke candidly about recent accounting developments, including a blue-ribbon panel’s endorsement of private-company accounting rules, the selection of a Dutch regulator to head the IASB, and concerns about IFRS carve-outs. The following is an edited version of the interview.
This month a blue-ribbon panel voted to recommend that U.S. standard-setters issue a separate set of accounting standards for private companies, similar to what the IASB issued 18 months ago for small and midsize entities (SMEs). What’s your reaction to the decision?
I feel very strongly that every country should have a simplified set of standards for small entities. There is a huge demand around the world for it. IASB has observed that even in environments that have good standards, like Australia, it is difficult to make small companies comply with the same standards as large listed companies. Right now the count is up to 60 countries that have adopted the SME standards.
The panel suggested that a separate board be created to develop and oversee private-company standards in the United States. Do you agree?
A separate board? No. But then, I think it depends on the board you are talking about. In the case of IASB, it was pretty obvious that a number of our board members had real experience in small entities, and we had Paul Pacter [IASB's director of standards for SMEs and director fo the global IFRS office for Deloitte Touche Tohmatsu] who is very interested and knowledgeable in this area.
Are there circumstances under which you would consider a two-board system?
It’s another solution, but the reason I am not really enthusiastic about a second board is that there is the danger that you don’t get the integration. If your company is complying with the SME standards, you are on track to becoming a listed company, if that’s your goal. The SME standards and IFRS are based on the same framework, written by the same people. It seems to be an easier route to going public, which requires using full IFRS. In contrast, if there were two separate boards, why should there be any commonality?