IFRS - is it stifling growth?

The head of one of Europe's largest insurance companies, who was earlier publicly censured and fined £500,000 by FSA, has launched a blistering attack on International Financial Reporting Standards. Using a lot of rhetoric, Henri de Castries, chief executive of Axa, said so far, international accounting standards as they applied to insurers had neither improved the transparency of accounts nor made them more comparable, and were stifling European growth."Have we actually achieved transparency and convergence? The answer is No to the first and No to the second. The process has been expensive and long for an outcome that is a very disappointing one," he said. He said the requirement for assets to be shown at fair, or current value, as opposed to historic cost, risked creating artificial volatility in the accounts of long-term investors, such as insurers. This was driving them out of equities, depressing share prices and generating less money for companies turning to the equity markets to raise capital. "At the end of the day, this is decreasing the growth rate in Europe," he said. The question that he must address is why US despite Sarbox achieved a growth rate which is spectacular when compared to Europe’s. In a survey by PwC two third of the participants felt that the transparency triggered by Sarbox could be a competitive advantage.