Standards convergence, especially between US GAAP and IASB is going to be tortuous. It's important that UK professionals not only take notice, following US sources as well as UK, but contribute to the debate. Perhaps this is where our upcoming podcast led Compliance Monitor could help - serving as a beacon for debate. We'll see.
There are fundamental differences between the US code and that used in the UK. In the US they are much more rules driven than principles led. It fits their culture perfectly. This is one of the contributing factors behind so many of the US fraud and accounting scandals along with a whole lot more heavy fines and criminal prosecution cases. Theory suggests the US will move towards IASB by 2007 but don't count on it. There are huge commercial vested interests on Capitol Hill. And from what I'm seeing, there's already a degree of back room horse trading going on.
The US profession knows things have to change or its image as a trusted resource will become a thing of the past. I have already talked about some of the issues inside US companies at Bazaarz. There PwC is under the spotlight.
But at home, any re-adjustment to standards (on top of anything that comes down the pipe for SMBs) could have a devastating impact on your clients' perceived financial health. Here, the people most interested will be finance houses and HMRC - in that order. You now have a choice. Sit back and wait for the tide to wash over you or take an interest, developing a plan to communicate to your finance connections. Believe me when I tell you they've no idea what'll hit 'em.
But a passive stance isn't appropriate for this kind of issue. I count myself as fortunate enough to have contributed to the debate on IAS39. I said at the time, the idea was fundamentally flawed and so it has proved. In this current debate I can easily envisage a situation where FASB argues its laws are based on principles and therefore if there's going to be any change, then it will be Europe that moves and legislates. Does that make convergence an inevitable fudge? I don't know. We're already impacted by SarBox, whether we like it or not. So if convergance matters to you in terms of increased compliance or rejigged processes - all at your cost - along with the obvious client communication problems, then I would have thought this represents an issue worthy of debate rather than imposition.
As you might notice from the number of assigned categories, I have a feeling this could be like a pebble dropped into a pond. Numerous professional ramifications.