From Japanese and German to Arabic and Russian, every one of the world's top 10 languages has more than 100 million speakers – a point made at a meeting of the US Securities and Exchange Commission (SEC) on August 27, 2008, by the commission's then chairman, Christopher Cox. He went on to make the not-terribly-bold prediction that it "may be a very long time" before the world has a single, common language.
But Cox followed with something more daring: "Fortunately, we won't have to wait nearly as long for the language of business and finance to converge. One of the more revolutionary developments in the world's capital markets is the remarkably quickening pace of acceptance of a true lingua franca for accounting," he said.
He was referring to the emergence of International Financial Reporting Standards (IFRS) as a credible alternative to US standards, and of the then immature convergence project, designed to bring the two together and, ultimately, allow the US to switch to IFRS.
Cox returned to this topic a couple of months ago, at an SEC conference on accounting, and if any of the audience had heard his 2008 speech and avoided the topic for the intervening six years, his words would have come as a bit of a shock.
"Today, I come to bury IFRS, not to praise them. The fact is, far too much time has gone by with no meaningful progress. I think we have to fairly conclude that the moment has passed. Full-scale adoption of IFRS in the United States might once have been possible, but it is no longer. This is not a prognosis. It's just a statement of fact," he said.
Bank regulators are publicly disappointed – and privately fuming – that they will be left to compensate for uneven loan-loss accounting rules
His words attracted a blizzard of coverage, but most stakeholders reached the same conclusion over the past few years, as the convergence project ran into a series of consensus-splitting technical debates. The US standard setter's retreat from joint proposals on the classification and measurement of financial instruments earlier this year was just the latest.
Some are not too unhappy with the outcome.
Richard Thorpe, an accounting adviser at the Financial Stability Board, says standards have improved as a result of the convergence work. But, bank regulators are publicly disappointed – and privately fuming – that they will be left to compensate for uneven loan-loss accounting rules via some kind of capital adjustment.
Accounting chiefs at both the Federal Reserve Board and the Office of the Comptroller of the Currency say convergence is too important to be allowed to die. Realistically, others say it will now be left in suspended animation for at least a decade.
The week in Risk.net, May 19-25 2017Receive this by email