IFRS: Off or on balance sheet?

IFRS seems to be the world financial language nowadays. This excerpt below highlights one of the key aspects in US GAAP that diverge from IFRS. Shall we be forgiven for thinking this might be one variable that lurks behind all the recent hype around the globe with the torrential collapses of American (and now European) financial giants?  (EJ)

 

Harder to keep assets off the balance sheet under IFRS

While the SEC deliberates over whether to broaden its use of IFRS, one crucial difference between US and international accounting standards is their approach to what instruments/liabilities may be kept off the balance sheet. Under current US accounting rules, certain loans such as those linked to risky mortgages and credit card debt, can be kept off balance sheet in vehicles known as qualified special purpose entities (QSPEs). Under IFRS, the central idea is control and it is a more principles-based approach, which makes it difficult to design something in such a way that it is kept off the company's balance sheet. Deutsche Bank managing director Charlotte Jones said at an accounting roundtable event that one of the most difficult parts of the conversion from US GAAP to IFRS in 2006 for Deutsche Bank was the requirement to consolidate a lot of their QSPEs (more than 200) that were kept off the balance sheet under US GAAP. Jones said that although it required more work, the IFRS control-oriented approach presents a more realistic picture of where the entity stands economically.

Source: http://www.ey.com/global/content.nsf/Australia/In_balance