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US GAAP & IFRS Convergence Progress Report Issued

April 16, 2010

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) published an accounting standard convergence progress report on April 14 2010. The report summarizes the two boards work to improve and achieve convergence of US GAAP and IFRS. In November 2009 the two boards demonstrated their shared commitment to convergence by establishing a comprehensive work plan to complete their joint projects by a June 2011 target. The 2011 target is significant because it corresponds with the year in which the SEC is expected to make a date certain decision about IFRS conversion.

To accomplish their objective of substantially converging US GAAP and IFRS by 2011, the boards have accelerated and intensified their efforts. Instead of meeting every four months, they have agreed to meet every month. In addition, they have expressed their willingness to schedule special meetings to address key convergence issues.

In addition to the stepped up convergence efforts, the boards are developing extensive outreach programs to involve a broad group of convergence stakeholders in standard setting due-process. Their outreach will include educational sessions on their websites and in Oceania, North America and Europe. They have already scheduled session in Tokyo, and Norwalk Connecticut.

As of 31 March 2010, the FASB and IASB had achieved substantially all of the milestone targets they set for the first quarter of 2010. The progress made by the boards is explained more fully in their report.

  • For five of the major Memorandum of Understanding projects they are on track to publish, by mid-2010, exposure drafts that would improve and achieve substantial convergence of US GAAP and IFRS in those areas.
  • On two major projects, financial instruments and insurance contracts, the boards have reached different conclusions on some important technical issues. Addressing convergence differences in those areas could affect the convergence timetables described in their report.
  • The boards also agreed in late March to explore an alternative approach to lessor accounting. That decision could also affect convergence timetables

The boards have agreed to maintain a high degree of transparency about convergence progress by reporting progress against planned convergence milestones. They will report progress quarterly with the next report being published in July 2010.

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