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Big Week on the Convergence Front
In what’s shaping up to be a big week on the convergence front, following last week’s announcement by FASB and the IASB that they would delay completion of their MOU projects ‘by a few months:’
1. FEI sent a letter to FASB and the IASB applauding last week’s announcement, and asking that the boards formally re-expose, for a 90-day comment period, the remaining MOU standards;
2. The SEC announced an IFRS roundtable will take place in July, and
3. FASB and the IASB released their MOU progress report.
Commitment to Convergence, and High Quality Standards
On a podcast posted by FASB today, FASB Chairman Leslie Seidman provided highlights of the MOU progress report (detailed further below), which followed last week's announcement by FASB and the IASB of the decision to take more time to complete the MOU standards. Specifically, Seidman observed:
"The primary purpose of [last week’s joint announcement] was to communicate our ongoing commitment to carrying out our robust due process on the convergence projects. Taking a look at the remaining decisions to be made, and our desire to cross-check with stakeholders on any key changes that we are making, we concluded that it was going to take us a few more months to complete our work. We think those changes are necessary to satisfy ourselves that the resulting standards are of high quality…"
FEI Applauds FASB/IASB Move To Take More Time; Calls For Reexposure of Remaining MOU Standards
In response to last week’s announcement by FASB and the IASB to take a few more months to complete the remaining MOU convergence projects on revenue recognition, financial instruments and leasing (as well as an additional project on insurance contracts), FEI President and CEO Marie N. Hollein stated in an April 19 letter to FASB Chairman Leslie Seidman and IASB Chairman Sir David Tweedie:
"FEI applauds the Boards’ joint decision to allow more time to complete these projects......[I]t is necessary and appropriate to re-expose the revised standard[s] to ensure that the new guidance achieves the desired result and does not introduce new issues or otherwise create unintended consequences for constituents."
Acknowledging the boards’ outreach efforts to date, and explaining why reexposure of the proposed standards is necessary, Hollein stated:
"We understand that members of the Board and staff have engaged in extensive outreach with constituents in face to face meetings and conference calls. We support such interactions as a valuable way to more quickly identify key issues with the Board’s tentative conclusions. However, it is important to remember that the specific language of the proposed standard is what ultimately determines the future path of interpretations, implementation and compliance. ..It is …imperative that ample time and great care …be devoted to ensuring that the literal words of the final standards in each of these areas are capable of high quality application on a consistent and repeatable basis at a reasonable cost.
"...We therefore recommend that for each of these projects, the Boards issue revised Exposure Drafts and allow a comment period of 90 days for each. FEI members stand ready to assist the Boards in whatever means are necessary to help identify potential issues with the revised proposed standards and to ensure that these documents are both operational and capable of cost-effective application in the U.S. environment.
"...We wish to stress that the quality and thoroughness of the due process, not the adherence to a timetable, is what is most important to the Boards’ constituents. We therefore ask that the Boards to take whatever steps are necessary to ensure that the final standards to be issued meet the specifications we discuss above, even if it means that the revised standards will be issued after December 31, 2011."
For more information on the FASB-IASB MOU Progress report, issued today, and the SEC IFRS Roundtable slated for July 7, announced yesterday, go here.