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Global Accounting Standards? Not So Fast

Publication Date: 
November 13, 2008
Source: 
Business Week
Author: 
David Bogoslaw

Professor Kenneth Scott is quoted in a Business Week article about the problems resulting from the move toward international financial reporting standards (IFRS):

The uproar over fair value accounting practices, which some critics have blamed for the depths of the global financial crisis, threatens to sink a long-sought move by countries around the world toward a single set of international financial reporting standards (IFRS). The U.S. Financial Accounting Standards Board (FASB) has been working with London's International Accounting Standards Board (IASB) since 2002 toward what accounting professionals call convergence. The Securities & Exchange Commission (SEC) is expected to announce its road map for conversion sometime this month, which will probably include early adoption in 2010 for about 110 of the largest U.S. companies with business operations throughout the world.

...

"If you think we have problems with transparency of balance sheets now, just wait for what's coming [under IFRS]," warns Kenneth Scott, a senior research fellow at the Hoover Institution and a professor at Stanford University's law school. Reclassification of financial assets "doesn't add anything to asset value. It just fixes the books."