US GAAP gains support in global standards race

The International Accounting Standards Committee’s race to achieve a core set of global accounting standards by early 1998 could be undermined by the increasing number of European companies adopting US GAAP standards.

Deutsche Telekom is one of the latest companies to opt to publish its accounts in line with the US GAAP standards, as the company moves towards privatisation with its shares being offered on the international capital markets.

Roger Davis, head of audit at Coopers & Lybrand, said: ‘A number of German and French companies are planning to adopt US GAAP standards for their domestic accounts. Companies looking to raise capital through Anglo-Saxon capital markets realise that continental accounting standards aren’t acceptable.’

He added: ‘As more economies accept the US GAAP, there is less chance of achieving a proper worldwide standard.

‘The US standard setters hold a number of key negotiating cards, and it’s going to be very hard for the IASC to persuade the Americans that they have got it wrong’, Davis said.

Peter Clark, senior research manager at the IASC, said: ‘It’s not surprising companies are using the US GAAP, because they must reconcile their accounts to American standards to get a US listing. But in two to three years, this may no longer be the requirement.

‘We are looking for endorsement of our international standards from the International Organisation of Securities Commission. But the Americans have said that international standards don’t have to be identical to the US GAAP. They are looking for an equal level of investor protection so in some cases the US GAAP standard will work, in other cases it will not.’