Accountants under fire in the US: wrong argument

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Courtesy of a Tweet from Rick Telberg (he’s a great source of accounting related headlines), it seems that many are pointing the finger at accountants for failing to deal with fraud. In the process however, they’re getting it wrong in attempting to get the US government to back off from adopting IFRS. One person is quoted as saying:

“Part of the problem has been a race to the bottom in favor of a more flexible international accounting standard that would decrease disclosure protection for the average investor,” he told Congress. “The current crisis makes a compelling case for why we need to slow down the movement toward the use of international accounting standards that could provide another backdoor route to financial deregulation and further erode confidence in corporate bookkeeping.”

I don’t get that. The US GAAP rules based system of reporting has failed. SOX has failed. Agreed. Anytime there are rules based methods of ring fencing accounting they fail. Why? Because there will always be someone willing to try and push the boundaries. IFRS provides all of us with the opportunity to understand accounts from different states on a common basis. What’s wrong with that? But then it seems there is widespread misunderstanding about how IFRS will impact in the US. Ever it was so.

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Tagged as: gaap, IFRS