But I suspect that will change in the United States. And that’s not a bad thing, because if we’ve got a big flaw in a proposal, the sooner we hear about it the better. Once the SEC says something [about a date for U.S. adoption of IFRS], then I suspect attention from the United States will focus very much more on us.
What should U.S. CFOs know about IFRS?
During the next three years, FASB and the IASB will make some major changes to financial reporting. So CFOs really want to get engaged, especially in the next 12 months, because that’s when the discussion papers and early exposure drafts will come out. And we want the right answer; we don’t want to do something stupid. So please, please tell us what you think of what we’re doing. Even if the date for the U.S. is not crystal clear, my view is that before too long, the U.S. will make the decision to go to IFRS. So don’t take a chance. Don’t have these standards hit you and then say, “Oh my goodness, we should have said what we think.” Now’s the time.
A July New York Times article said some critics worry that IFRS would “put American investors at the mercy of overseas regulators who enforce weaker rules and may treat investment losses as a low priority.” How do you respond?
It is absolute nonsense. The SEC is going to look at the accounts that are coming in. Countries around the world aren’t just going to throw away their own accounting standards if they think we are bringing out standards that aren’t very good. We have been looking at disclosures on IFRS and U.S. GAAP, and, actually, you get far more disclosure under IFRS.
Will U.S. adoption be followed by a moratorium on new accounting standards, like the four-year moratorium put in place after the European Union adopted IFRS in 2005?
We really want to try to do that if we can. We had quite a problem in 2001, because Europe didn’t consult us about switching over. It just picked 2005, which forced us to do a sort of cut-and-paste [on many standards]. We didn’t finish that until March 2004. That gave Europe only nine months before it started. The United States won’t have to go through that. But we do believe, with people putting in all the new systems [required by a change to IFRS], the last thing they want is another series of changes.
You’re now working with FASB to accelerate some long-term — and pretty major — accounting convergence projects and finish them by June 2011. Why that date?
When we first agreed to converge U.S. GAAP and IFRS in 2002, there were 10 areas where we felt that both our standards were pretty poor. The target date for writing new ones was 2012 or 2013.