Communication rather than jargon: a worldwide need, in every realm

摘要

Like the Holy Grail, convergenceof financial reporting standards is an ever-receding goal. We may get there one day. But will a unified framework, even with enhanced consistency and comparability, provide investors worldwide with more intelligible accounts? While the harmonisation processtreadsth rough interminable conceptual minefields, that key question is easily overlooked. Meanwhile, the range of permissible options leaves investors with an interpretative nightmare. A study by Citigroup last year focused on reconciliations between International Financial Reporting Standards and US GAAP filed with the US Securities and Exchange Commission by 73 European companies listed on US exchanges. It concluded that the reconciling differences, mainly concerning treatments of tax, goodwill/intangibles, pensions and financial instruments, were so great that they could well cause investors and analysts to reach different conclusions about financial position and performance - the very antithesis of what accounts are supposed to do, given that each framework claims acceptance, in equal measure, of its technical excellence and integrity.