Political decisions that may affect cross-border business policies in the US and the UK have so far had no effect on international accounting standards, Hans Hoogervorst said Tuesday.
In June, UK voters decided to withdraw from the EU. Less than five months later, US voters elected Donald Trump, who has vowed to renegotiate trade agreements and take a tough stance on immigration.
Both decisions were widely viewed as a backlash against globalism. But will they result in a retreat from global accounting standards?
“Of course, it is too early to tell, but for now we see no immediate consequences,” Hoogervorst, the International Accounting Standards Board (IASB) chairman, said at the American Institute of CPAs Conference on Current SEC and PCAOB Developments in Washington.
Hoogervorst acknowledged that it’s possible that the longtime trend towards growing global investment and trade may be interrupted following the recent political developments. But he said that even if cross-border transactions are reduced, the rationale for common accounting standards is strong as multinational corporations continue to do business and investors keep seeking investment opportunities across the world.
Meanwhile, Hoogervorst said Britain already has signaled support for continued use of IFRS following Brexit.
“While the UK has decided to leave the EU, it has not yet decided to leave the world,” he said. “The Brexiteers are indeed very keen to be seen as pro-free trade and pro-globalisation.”
Although the IASB and US standard-setter the Financial Accounting Standards Board (FASB) no longer are participating in joint standard-setting activities as they have in the past, Hoogervorst said the IASB’s relationship with FASB is cordial. He expects it to continue to remain cordial and said he believes President-elect Trump has other concerns that are more pressing than global accounting standards.
Russell Golden, FASB’s chairman, echoed Hoogervorst’s support for continued co-operation between FASB and the IASB.
“We will continue to engage with the IASB and other national standard-setters,” Golden said. “We expect to have joint meetings with these standard-setters in 2017 to talk about our respective priorities and future initiatives. Such relationships help us improve financial reporting, while at the same time bringing us all closer to common solutions around the globe.”
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.