LONDON Stumbling efforts to align global book-keeping rules for investors should be halted and focus shifted to forging top quality standards, a leading accounting body said on Tuesday.
The London-based ICAEW called for the first time for the International Accounting Standards Board (IASB), whose rules are used in over 100 countries, to end a decade-long "convergence" project with its U.S. counterpart, the FASB.
It is the latest sign of growing frustration at how the alignment efforts, called for by world leaders, have stumbled as the United States drags its feet over adopting IASB rules.
Nigel Sleigh-Johnson, head of the ICAEW's financial reporting faculty, said in a report to be published on Wednesday the era of convergence should be ended.
The IASB should concentrate on forging top quality rules for countries that apply its standards, known as IFRS, he said.
"It is better that the IASB and FASB boards issue separate standards, than deliver unsatisfactory compromise solutions or do nothing at all," Sleigh-Johnson said.
The IASB and FASB have been locked in joint board meetings for a decade to forge what the Group of 20 countries (G20) call a single set of high quality common standards.
Bringing the world's biggest capital market on board is seen as turning IASB into a truly global standard setter but industry officials already point out that new capital raising is already shifting east to Asia and the United States will become relatively less important.
The IASB has just opened its first overseas office in Tokyo.
The deadline for convergence has been pushed back several times due to clashes over key rules, and has now been set for mid-2013 though few believe this will be met.
"The G20 should end its calls for convergence and play a more active role in promoting the adoption of IFRS. As a minimum listed companies should be given the option of reporting under IFRS," Sleigh-Johnson said.
IASB Chairman Hans Hoogervorst sent a veiled warning to the United States in a speech in New York last week.
"IFRS already has a global impact and that will not change. So there is no longer any risk of IFRS disintegrating as a result of a standstill in the United States," he said.
There are four Americans on the IASB board and Hoogervorst faces calls for a cull in favour of giving seats to countries that apply IFRS, such as Canada.
Membership of the IASB's monitoring board, made up of regulators and other public interest officials, will also depend in future on applying or committing to apply IFRS rules.
"I believe the United States should remain an important participant in our institutions and activities. But obviously, U.S. influence will be commensurate with its commitment to our standards," Hoogervorst said in his speech.
The ICAEW said it is likely to prove untenable for countries to hold out and stick to national accounting rules.
Smaller, domestically-focused U.S. companies fear high costs in switching to IFRS and Congress is also leery of handing over regulatory sovereignty in a crucial area to a foreign body.
(Editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)