The USA must adopt international accounting standards or jeopardise the position of its capital markets, according to a full-time member of the Financial Accounting Standards Board and former vice-president and treasurer of computing giant Compaq.
‘We need one set of international accounting standards, rigorously interpreted and enforceable,’ said John Foster, addressing top accountants at the recent 7th Annual Financial Reporting Conference in California.
Foster cited the case of car manufacturers, Daimler Benz, whose DM168m German accounting profit was translated into a DM94m loss when it was listed on the New York Stock Exchange. He said users of accounts are bewildered by how differences in intentional accounting procedure could produce such anomalies.
He called for harmonisation of accounting rules, saying it must not be a question of choosing between domestic and international – everything must be international.
Foster said the US does not have all the answers, but he feared the International Accounting Standards Conference was not adequately resourced to hit the accelerated target of core international accounting standards by March 1998. The IASC needs to be full-time, independent and with a large support staff, he insisted.
An exposure draft, due out in the US early next year, proposes that companies report sales and cost of business segments along the lines of those reported to the chief executive. This has caused uproar among a group of companies fearing the reporting requirement would disclose financial information down to the level of product lines.