I’m a big fan of Alfred Hitchcock’s film North by Northwest. A critical plot element is the statuette containing a top-secret microfilm. (Anyone who hasn’t seen the film should see it, and don’t worry I won’t give out any spoilers.) In the above video, the Master of Suspense himself describes a MacGuffin.
The hero and heroine follow this statuette through most of the film, and yet, the film never gets around to explain what’s on the microfilm, or why it’s so important. It’s a classic “MacGuffin.” Wikipedia: “the defining aspect of a MacGuffin is that the major players in the story are (at least initially) willing to do and sacrifice almost anything to obtain it, regardless of what the MacGuffin actually is. In fact, the specific nature of the MacGuffin may be ambiguous, undefined, generic, left open to interpretation or otherwise completely unimportant to the plot. Common examples are money, victory, glory, survival, a source of power, or a potential threat, or it may simply be something entirely unexplained.”
What makes the MacGuffin such an entertaining plot device in a thriller film is that, in spite of the fact that it drives the entire plot of the film, it is often unexplained and sometimes even completely unimportant.
Another great example of a MacGuffin (which I didn’t even realize was a MacGuffin until I started working on this blog) is R2D2 in the original Star Wars film (now sadly degraded to Episode 4). Heaven forbid, I wouldn’t say that R2D2 is unimportant or unexplained. And yet, much of the film revolves around a data transmission inside R2D2, a data transmission about which we know very little. Classic MacGuffin.
I had the privilege of attending a Deloitte presentation on IFRS. I am embarrassed to admit that, as the presentation worked its way through Financial Instruments and Leases, my mind wandered elsewhere. That’s when it occurred to me that IFRS is a classic MacGuffin.
Look at the Wikipedia definition again:
The defining aspect of a MacGuffin is that the major players in the story are (at least initially) willing to do and sacrifice almost anything to obtain it,
Judging from yesterday’s presentation, and the passionate arguments for IFRS as the on and only future of standard-setting, I have little doubt that the big firms will do and sacrifice almost anything to see the US adoption of IFRS.
regardless of what the MacGuffin actually is. In fact, the specific nature of the MacGuffin may be ambiguous, undefined, generic, left open to interpretation
IFRS is, as yet, not ready for prime time. Going through the specific standards, no one can say (with a straight face) that IFRS is sufficiently developed to become US GAAP. Many of the standards haven’t yet been written, and no one can say what they will look like in the US.
or otherwise completely unimportant to the plot.
I have yet to hear a coherent explanation of why the US should switch over to IFRS. I hear a lot of “level playing field.” But what is that? There’s no such thing as a level playing field. Every country is different. Every country has it’s own legal environment, its own financial markets, its own economy, its own information environment. Every country is different. That’s life. Any differences between standards can easily be explained through disclosure. Here is the question: Do the benefits of IFRS adoption exceed the costs? A common answer I’ll hear is that “it’s inevitable.” But that doesn’t answer my question! Do the benefits exceed the costs? I’m still waiting for a good answer.
Few people today would argue with me that the greatest problem in accounting today is the lack of transparency. How would IFRS adoption solve this problem?
Common examples are money, victory, glory, survival, a source of power, or a potential threat, or it may simply be something entirely unexplained.
So here we are, on the road to oblivion. I am proud to admit I came up with a cute expression:
If we can harmonize/converge/endorse/condorse the standards (condorsement????).
If the litigious US legal environment can change to become hospital to principals-based standards. ‘
If we are willing to give up sovereignty over our own standards.
If IASB adopts more open governance.
If investors are willing to tolerate a “report whatever income number you want” GAAP.
If companies are willing to pay for this.
It’s a great plot, I can’t wait to hear what happens next.