The IASB staff have released a report responding to the very lukewarm SEC staff report on IFRS convergence. Tom Selling at The Accounting Onion characterizes the IASB report as The IASB’s Stages of Grief.
He points out numerous places where there are massive differences between U.S. GAAP and IFRS. A few examples he sees are:
- business combinations
- interest capitalization
- netting cash overdrafts on the cash flow statement (actually a loan)
- contingent liabilities
- booking biological assets at FMV before the harvest (book the value of apples on the tree in the quarter before they are harvested!)
- loan impairment
I know there’s lots of accounting trivia in there, but it all points towards trouble in the world of convergence.
There are still big differences between GAAP and IFRS. In addition to all the other problems mentioned previously, it just doesn’t seem like a decade of work has produced that much progress.
The good professor identifies several stages of grief in the IASB staff report.
While reading the IASB staff report, it occurred to me that the IASB is reacting to the SEC staff report like a patient who receives a diagnosis of terminal cancer from its doctor. First comes Denial, of which there are numerous manifestations in the IASB report …
After Denial comes Anger. …
And after Anger comes Bargaining. …
Check out the full post. If you are concerned about the issues created from IFRS, you may particularly enjoy his prediction of the future of the IASB and IFRS.