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IFRS Could Be Dangerous Pipe Dream, Experts Argue

Two accounting experts argued recently that International Financial Reporting

Amid the ongoing efforts to unify the financial world under a single set of accounting standards, two experts have said the dream may never be a reality.

Uniform rules governing diverse societies will not yield uniform results, wrote Stella Fearnley, professor of accounting at Bournemouth University, and Shyam Sunder, James L. Frank Professor of Accounting, Economics, and Finance at Yale School of Management. In their piece for the Financial Times, they pointed to the euro as a financial unifier that was meant to bring great gains.

Too many stakeholders are likely to offset the balance of an effective rulemaking process, argued Fearnley and Sunder. As such, the European Monetary Union has reached an untenable position in regards to the euro. The EMU did not take into account many of the risks involved in uniformity, and Fearnley and Sundar said many of the same risks can be applied to efforts by the International Accounting Standards Board to implement International Financial Reporting Standards.

Many major economic players have yet to sign on to the IFRS, which could signal trouble ahead for the standards. Recently, IFRS Trustees Chairman Michel Prada urged those financial powerhouses, which include the United States, Japan and China, to come on board so the world can fully realize the benefits of unification.


Bryan Frey
Title: VP Finance/Corp Controller
(VP Finance/Corp Controller, ) |

I don't think you have to read more than "the U.S., Japan and China have not signed on to IFRS" to know that it's in serious trouble. And I agree with the central premise that a uniform and unified solution won't be as favorable on as many fronts as IFRS boosters seem to envision. We are still a looong way away from this.

That said, I think convergence on certain issues does and will continue to make sense and I am happy to see progress in some of those smaller arenas.