The Financial Accounting Standards Board is advocating an approach to international accounting that has been a “miserable failure” for 25 years, Ian Mackintosh, the vice chairman of the International Accounting Standards Board, said earlier this week.

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Rather than continuing to pursue the goal of a single worldwide set of financial-reporting standards, FASB has returned to an approach that accepts the differences between countries and works to minimize them, Mackintosh told the IFRS Foundation Conference in London.

In his prepared remarks, he suggested that FASB leaders and the board’s parent organization, the Financial Accounting Foundation (FAF), were “turning back the clock” to a time before the two boards had begun seeking accounting convergence a dozen years ago.

The remarks seemed to be the latest salvo in a spat between regulators on either side of the Atlantic that recently included a speech by Christopher Cox, former Securities and Exchange Commission chairman, in which he said that he had come to “bury IFRS, not to praise them.”

Even though FASB and IASB late last month jointly issued a revenue recognition standard — an achievement Mackintosh called the “jewel in the crown” of convergence — mutual bitterness seemed to linger in the wake of the boards’ inability to come to terms on converged leasing, financial instruments and insurance standards.

“I find it interesting to note that in recent speeches, various members of the FASB have begun to present a vision of international standard-setting that is remarkably similar to the old … approach,” Mackintosh said. “This is an approach whereby major economies maintain their own accounting standards, using [International Financial Reporting Standards] as the international benchmark and seeking to reduce their differences.”

In particular, he cited a recent statement by FASB vice chairman James L. Kroeker: “We recognize that one size may not fit all. By that, I mean that we understand that differences in standards will persist because of the legal, regulatory and cultural differences among different jurisdictions.”

Mackintosh also quoted the FAF Annual Report: “Even as we commit ourselves to global convergence, FASB’s first priority is to improve GAAP for the benefit of all GAAP stakeholders.”

When it addresses the divergences between the two boards on leasing, financial instruments and insurance, Mackintosh noted, FAF says FASB’s actions are “consistent with its mission to first improve GAAP and then converge if possible.”

The problem with FASB’s view, Mackinstosh said, is that differences between accounting standards would persist, making it impossible to compare results. Between 1973 and 1998, nine of the largest economies, including the United States, worked together to curb divergence among national accounting standards, he recalled. “It was a very attractive idea, but unfortunately one that in practice failed miserably. Each of those nine countries continued to have very different sets of accounting standards, each incompatible with the others.”

The reason? “Each country took only those international standards that were consistent with their own preferences. If the preferences of the national standard-setter were different, then they did their own thing. Each country had different preferences in different areas, and hence there was no international comparability,” Mackintosh added.

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