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September 24, 2009

Comments

Raza

Hi Tom - an excellent post. I could not agree with you more here on Kroeker. Your post on the top 10 reasons as to why we should not adopt IFRS is on target as well - All the efforts of the past 50-60 years (especially)is going to be trashed in the name of convergence! Who says we do not have conflict of interest in hiring top people? : )

Glen

Tom, I agree with your comments that a potential “race to the bottom” among world standard setters if IFRS is adopted. It doesn’t seem likely that standard setters, whom have a duty to protect the integrity of the checks and balances impacting the financial reporting environment within their jurisdictions, will pursue a tit-for-tat response to regulatory events that occur in another jurisdiction.

The irony is that adoption of IFRS will increase the likelihood of a global “race to the bottom” not among standard setters or regulators, but rather among companies that prepare the financial statements. This is so because a convergence to International Financial Reporting Standards, without a corresponding convergence of regulatory oversight of world auditors (not sure this would be a good idea) and corresponding convergence of legal systems (this will never happen), would lead to enforcement anomalies throughout the world. We know that regulatory enforcement and civil proceedings against bad guy preparers would be more intense in certain jurisdictions than in others.
We also know that, based upon past experience, many individual companies will have no interest in preserving the integrity of the global financial reporting environment. Their sole motivation is to paint the best financial picture as is possible. The law of the jungle would eventually force most companies to seek to migrate and report, as much as possible, to those jurisdictions from where they would have the least exposure to legal or regulatory repercussions. The obvious irony is that IFRS will INCREASE THE LIKELIHOOD that there will be a global “race to the bottom” in terms of overall financial reporting integrity and quality.

I, like you, am not a big fan of Convergence

Mark Johnson

Thanks for providing the useful article.Your post on the top 10 reasons as to why we should not adopt IFRS is on target as well - All the efforts of the past 50-60 years (especially)is going to be trashed in the name of convergence!
The information is something that I will certainly take into account. Look forward to reading other articles.

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