Services
December 27, 2012
Those following the progress of the adoption of the International Finance Reporting Standards (IFRS) by the U.S. Securities and Exchange Commission (SEC) know that progress has been stalled for more than a year. There is still talk about potential convergence between the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), but as of yet, no decisions have been made by the SEC. An SEC staff paper, released in July, was a final report of what issues the Commission should look at to evaluate any recommendation for possible adoption of IFRS in the United States. It summarized all of the work and analysis since 2010, but did not offer any recommendations or options for IFRS.
On November 15, Hans Hoogervorst, IASB Chairman, delivered a speech in Tokyo at the opening of the IFRS Foundation regional office in Asia-Oceania, aimed to dispel myths about IFRS. Some of these myths are thought to be some of the reasons the U.S. has been slow to move on the adoption or even convergence of IFRS and standards used in the U.S., the Generally Accepted Accounting Principles (GAAP). Below are Hoogervorst’s statements on the idea that the IASB is only using fair value as a measure of value.
One persistent myth about the IASB is that we (perhaps secretly) would only be interested in fair value. The truth is that we have always been proponents of a mixed measurement model. While our colleagues at the FASB at one time proposed a full fair value model for financial instruments, the IASB decided from the outset that a mixed attribute model would be more appropriate. We understand full well that while fair value measurement is very relevant for actively traded financial instruments, for a manufacturing company it does normally not make a lot of sense to fair value its Property, Plant and Equipment.
Currently, we are reviewing the measurement chapter of the Conceptual Framework. We will try to develop clear principles on which measurement technique to use in what circumstances. We have some very tough nuts to crack and the outcome of this exercise is far from clear. However, it is most unlikely that it will result in a choice for fair value as the single measurement technique. So the fair value myth can be put to rest.
We only have one mission: to develop high quality accounting standards that serve our constituents around the world. We rely heavily on input from jurisdictions around the world when setting our standards.
As it pertains to appraisal and valuation, IFRS would require that the value of public companies’ assets, including machinery and equipment, are recorded by an independent appraiser. For more information on the differences between IFRS and the current U.S. standards, GAAP, click here. To learn more about IFRS and appraisal and EquipNet’s appraisal services, visit The Asset Accuracy Resource Center or contact us.
Categorias: Services
Tags: appraisals iasb ifrs,
