experts say draft standard on business combinations is key to future of global standards<\/p>\n
paul grant, accountancy age 07 jul 2005
\nglobal accounting convergence is to face an acid test in october with the release of a proposed new standard on both sides of the atlantic.<\/p>\n
in the first major project of its kind, the international accounting standards board and the us standards setter fasb have combined to produce a draft standard on acquisitions. the new rules would replace ifrs3 in europe and sfas141 in the us.<\/p>\n
but it will be the responses to the proposals, and the way they are handled, that will determine whether a common set of global accounting standards is a real possibility.<\/p>\n
?a key challenge for the iasb and fasb in working on this project is how conflicting responses from their constituents will be handled during the re-deliberations,? said mark vaessen, head of kpmg?s ifrs group.<\/p>\n
?managing the potentially conflicting priorities and views of such a diverse group will be no mean feat. success in this first major joint project would be an important step for their convergence programme.?<\/p>\n
but the designers of the proposals hailed it as a great achievement in co-operation, and a victory for those concerned that converging with the us would mean a move to rules-based accounting.<\/p>\n
sir david tweedie, chairman of the iasb, said that the issue of the exposure draft ?demonstrates the ability of the iasb and fasb to work together?.<\/p>\n
?by focusing on fundamental principles and avoiding exceptions the proposals aim to eliminate many of the inconsistencies in the existing guidance,? he added.<\/p>\n
however, some are more sceptical about the standard.<\/p>\n
?for starters, it is 135 pages of principles,? said peter holgate, senior technical partner at pricewaterhouse- coopers. ?it is also a bit of a puzzle where it has come from and what it is trying to achieve. for a convergence project, a lot of it seems to be new to both boards. you have to ask what prompted taking it off in a new direction.?<\/p>\n
the main changes being proposed in the standard are a requirement to measure the business acquired at fair value and to recognise the goodwill attributable to any non-controlling interests, rather than just the portion attributable to the acquirer.<\/p>\n
it is also hoped that the standard will not be the end of work by standard setters on business combinations.<\/p>\n
?we see a real need for a next phase on mergers and acquisitions-related topics,? said vaessen.<\/p>\n
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