Editorial

In September 2002, at a joint meeting in Norwalk, Connecticut, US, the IASB and the FASB signed a memorandum of understanding, known as the "Norwalk Agreement", in which they committed to develop accounting standards for both domestic and cross-border financial reporting, to use their best efforts to make the standards fully compatible, to coordinate future work programmes to maintain that compatibility. In the same year, the European Union (EU) adopted IFRS standards for mandatory use by listed groups across the Union from 2005. At that time, the US Securities and Exchange Commission (SEC) was considering whether to allow listed domestic companies to report under IFRS to satisfy their filing obligations, and it was widely expected that this might be the case. Such a decision by the SEC would have made the standards truly global and enhanced their benefits to international companies and investors in capital markets around the world. As of 2024, though, this dream has not been realised. In his interview with WAR in 2021 (see WAR, July 2021), former board chair Hans Hoogervorst said that in his opinion one of the reasons why the US had not finally adopted IFRS was that "companies were already struggling with the financial crisis, and they did not want to put them through a costly reform". He had not, however, given up hope that the US would adopt IFRS, as he considered it would make more sense for multinational companies to report using a single set of standards. Although the convergence efforts of the two boards had mixed results, one of the great success stories was their work on revenue recognition, which resulted in IFRS 15 and Topic 606; two standards that were largely converged.