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FASB and IASB to Meet Monthly on Convergence

December 21, 2009

Bob Herz

The FASB and the IASB plan to meet every month in order to complete accounting standard convergence by June 2011. The monthly meetings are necessary as the chairmen of the two boards focus on their efforts to reconcile US and international accounting standards

FASB Chairman Robert Herz and IASB Chairman Sir David Tweedie held a three-day meeting at FASB headquarters in Norwalk, Conn. In late October to resolve difficult differences in areas such as fair value measurement, revenue recognition, asset impairment and financial statement presentation. During their meeting, they set a series of milestones for when they expect to issue draft standards.

Sir David Tweedie

“We’re going to work on these issues together every month,” said Tweedie. “That’s why we think we’ll make our June 2011 target date.” The June 2011 is important because it was a target set at the G-20 summit in September 2009. During their meeting the G-20 encouraged the development of a single set of high quality global accounting standards.

FASB Chairman Bob Herz commented that the $64,000 question is, “Where are we going with IFRS?” as he described plans for the FASB and the IASB to work more closely on uniting US GAAP with international standards.

The SEC has not yet approved its proposed roadmap to the adoption of IFRS, but is addressing the issue. Commissioner Elisse Walter, in her keynote address to the American Institute of Certified Public Accountants, said that in early 2010 the SEC will determine what to do about the adoption of international accounting standards. SEC staff members are “formulating a recommendation to the commission” based on the comment letters it received on its proposed roadmap to the adoption of IFRS. The commissioner said “I expect we will likely consider further action sometime in early 2010”.

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2 Comments leave one →
  1. February 12, 2010 6:24 pm

    Dear Sir,
    Everyday i feel pained that you are just rushing activities to please the Americans even in areas that are so sensitive in peoples life like the area of managing and manitening individual wealth.

    1. Isn’t it too obvious to us all at the creative accounting in America is what has been leading to many world economic disasters?

    2. Why should we rush to adopt a model that can not protect or control recklessness in the world of financial institution.

    3. I am more confortable with our systems IAS than the FASB. If we must adopt the American standards, i suggest that we do it with alot of caution.

    Regards

    Ibrahim

  2. Jeff Henson permalink
    February 12, 2010 8:57 pm

    Very valid concerns Ibrahim. There are many dishonest people who have abused accounting to cover financial weakness and even outright fraud. I do not believe that the abuse is caused by accounting standards, but rather by individuals who are pressured to show positive results at whatever cost. Having said that, is the U.S. rules based approach or the IAS/IFRS principles based approach best? Each has its strengths and weaknesses.

    U.S. GAAP rules are very clear with bright lines of what must be done and not be done thereby forcing the presentation of financial results in a particular way for each company and each industry, sometimes to the detriment of comparable presentation and fair presentation of financial transactions. The principles based approach of IAS/IFRS allows for more comparable results among companies and industries as well as fair presentation of financial results. On the other hand, a principles based approach allows more judgement by accountants and therefore more room for accounting principle abusers to mislead.

    Even with the weaknesses of a principles based approach, I still believe it is best. As professionals, we will need to establish a framework for making judgments about how to best present financial results. Our standard setters will need to require significant levels of disclosure to allow financial statement users to determine for themselves whether they believe a company’s financial results. Our regulators will need to vigorously pursue enforcement against those who abuse accounting standards.

    With the liberty comes responsibility and consequences. Let us all restrain our selfish desires, pursue the highest result, take responsibility for our actions and face the consequences of our choices as we do our best to fairly present financial statements!

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