MADISON, Wis.—Financial regulators and corporations worldwide are moving closer to accepting—even demanding—a uniform set of international accounting standards with which financial institutions in all countries must comply. However, not all countries, including the United States, have yet required their institutions to rise to the global regulatory challenge. That inconsistency was revealed during an International Financial Reporting Standards (IFRS) webinar hosted Oct. 8 by World Council of Credit Unions (WOCCU).
The 90-minute broadcast from WOCCU's Madison office included participation from financial experts in the U.S., Canada and Macedonia, the later two of whom were connected remotely. Participants from 12 countries logged on for the discussion.
Demand for the topic emerged from WOCCU member countries, many of which are already in the process of transitioning to international standards, according to Dave Grace, WOCCU vice president of association services. The complex demands of the process prompted WOCCU to address the topic through an interactive webinar.
"More than 100 countries are actively moving towards international standards," Grace said. "We have a tremendous opportunity to learn from credit union systems already at the forefront of the transition. We don't want other credit unions and their regulators to have to make this journey on their own."
Participants heard from Holly Skaife, an associate professor of accounting at the University of Wisconsin-Madison, who serves on the Standards Advisory Council of the International Accounting Standards Board (IASB); Gary Rogers, vice president of financial policy for Credit Union Central of Canada (CUCC), a WOCCU member organization; and Eleonora Zgonjanin, CEO of FULM Savings House, WOCCU's member in Macedonia. Institutions in each country have found themselves at different stages of the process, and all presenters shared their experiences.
"The U.S. is the largest country that has not yet embraced IFRS and still favors generally accepted accounting principles (GAAP)," said Skaife. For many U.S. regulators, GAAP's rules-based methodology is more stringent and demanding than IFRS standards, which are more principles-based and rely on faithfulness of the representation of financial data. The country's eventual migration to IFRS, while likely inevitable, still may be three to four years away, she explained.
In Canada, the process already is underway for most credit unions, which will be required to comply with IFRS standards in reporting their financial data for all fiscal years beginning on or after Jan. 1, 2011, according to CUCC's Rogers. This will require more judgment and more disclosure by institutions, which will be facing less rules-based guidance, he added.
"This is far more than an accounting exercise," Rogers said. "Canadian credit unions are facing a creeping crisis of complexity, and our obligation is to provide credit unions with the right tools so that, together with their auditors, they are able to ready themselves for the change."
For Macedonia's single credit union, the process is already complete, according to Zgonjanin. The credit union CEO emphasized the need for adequate time and resources. She suggested setting aside a minimum of 12 months for the transition process, including six months for development of the proper policies and procedures in order to keep the process on track.
"The transition to international accounting standards is not possible to complete manually, with less than three employees, in less than six months and without external assistance," Zgonjanin said.
To view the webinar in its entirety, please visit www.woccu.org/ifrs.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 103 countries serve 208 million people. Learn more about World Council's impact around the world at www.woccu.org.