The IFRS v US GAAP debate rumbles on but I’m not sure anyone has really figured out the real problem.
IFRS requires (gasp) judgment and that’s something that’s anathema to the US way of doing things. Go to audit there and what happens? The parameters are agreed prior to performance worked out against whatever interpretation of ‘the rules’ suits both parties. Is it any surprise then that audit firms are sued with boring regularity? Why? They kept to the script but that’s not what investors/interested parties expected. That’s what rules based systems lead towards. Am I using that as an excuse to let the Big Four off the litigation hook? No way – they signed up for the same deal as their clients.
For a reality check, you only have to step off a plane and stand outside to realize that in the land of the free, you’re ruled by…rules…mostly presented on placards for all to see. Everything from crossing the road to where you can hail a cab, grab a smoke or take a leak. It really does assume that people are incapable of thinking for themselves. That’s a dumbing down of intellect I hope never takes hold in Europe.
Some will see this as anti-American. It’s not. It’s anti-stupidity. If there’s any way to solve the problems the audit profession faces then this is job number one.
Alternatively – ask yourself this question: why do the ambulance chasers manage to get litigation to stick in the US but almost nowhere else?
Time to change the mindset methinks but who is up for that?