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Very interesting and timely: KPMG chief rues lack of convergence in international accounting standards

KPMG International Chairman Mike Rake opens the KPMG Conference at the Grand Hyatt in Dubai.

Published: 11/05/2006 12:00 AM (UAE)

http://archive.gulfnews.com/business/Banking_and_Finance/10080002.html

By Arif Sharif, Staff Reporter

Dubai: Attempts to harmonise two competing international accounting standards is making slow progress and frustrating global businesses, the head of audit and accounting firm KPMG said yesterday.

Michael Rake, chairman of KPMG International, told a regional KPMG conference that the business world is frustrated with the inadequate progress on the convergence of accounting standards.

"We have the US accounting standards on the one hand and the international accounting standards [also called on the International Financial Reporting Standards, IFRS] on the other," Rake said in his opening address to KPMG's partners at the meet.

"They should be converged to a principles-based approach which is more comprehensible, but people feel that is not happening at the right pace. The US GAAP [generally accepted accounting principles] is in a mess and IFRS needs greater clarity in its framework".

Most of the world, including all banks, financial institutions and listed companies in the UAE, currently follow the IFRS, a principle-based accounting system. The US follows the US GAAP, that is now falling out of favour. The accounting bodies governing the two have committed to move together but need to move faster, Rake said.