FRC chief warns of EU 'breakaway'

The UK’s top accountancy regulator has said that there are moves underway in
the European Union looking to establish a breakaway version of international
accounting standards, a move that could undermine efforts to converge IFRS with
US GAAP.

Paul Boyle, chief executive of the
Financial Reporting
Council, who is stepping down in November, warned that such a move would
also have serious repercussions in the US, as foreign issuers would have to iron
out the differences between IFRS-compliant accounts and US GAAP.

‘I think there’s a serious risk of this,’ said Boyle. ‘We’re not just
imagining it.’

Speaking to Accountancy Age TV, Boyle warned that any EU action
would undo significant progress to align US and European accounting. Boyle is
stepping down later this year after FRC efforts to deal with one of the most
turbulent periods in the history of companies, standard setters and the
profession.

‘I’m hopeful that the EU will pull back from the brink,’ he said. ‘It would
be a big step backwards. Also the requirement for non-reconciliation [of IFRS to
US GAAP for foreign issuers] is dependent on the IASB’s version of IFRS. The SEC
would reimpose the very costly reconciliation.’

The FRC noted last week the recent increase in political pressure on both the
IASB and Financial Accounting Standards Board.

‘[The FRC continues] to have significant concerns that the EU might adopt its
own version of IFRS rather than the standards as published by the IASB,’ Boyle
said in the reporting watchdog’s annual report last week.