Critique of potential IFRS monopoly
I just read an insightful, if not provocative, paper on the shortcomings of a potential IFRS monopoly. The paper entitled, “IFRS Monopoly: The Pied Piper of Financial Reporting,” is written by Shyam Sunder of Yale University, and I recommend it to anyone who wants to form a balanced opinion about whether the US should adopt IFRS as promulgated by the IASB.
The paper is not heavy on data, although it does provide an extensive bibliography for those hungry for data. Instead, the paper critiques the usual arguments made in support of an IFRS monopoly (or exposes those situations where no argument is ever made, but everyone seems to accept the idea as given). Then the paper provides a number of arguments against IFRS as a monopoly along with what I thought were very difficult questions to answer. I’m not saying that I agree with the specific arguments in the paper, but I am persuaded that the arguments should be heard and carefully considered.
I know this topic stirs up lots of emotion among many academics, and responses to this blog are not likely to provide useful input to the FASB per se. However, understanding how standard setters converge standards and how foreign jurisdictions go about adopting and/or endorsing IFRS provides important context within which to understand all other standard setting projects. And at the very least, the SEC is still open to ideas on how to proceed with IFRS in the US, as evidenced by the May 26, 2011 SEC Staff Paper: Exploring A Possible Method of Incorporation of IFRS, and its description of the “condorsement” approach, which seems quite different from pure IFRS adoption. So, take some time to read this paper, and post any reactions you may have here. I look forward to reading them.