The Financial Accounting Standards Board (FASB) announced it will undertake a short-term project to reduce or eliminate differences between U.S. accounting standards and those issued by the International Accounting Standards Board (IASB). But a new capital market survey shows big institutional investors don't see the need for major revisions to U.S. accounting principles or replacement with international accounting standards.

• FASB's Project. According to FASB's announcement, it will issue a final statement by December 31, 2003 setting forth the differences to be eliminated. The specific issues to be addressed in the project have not yet been identified, but the Wall Street Journal reports that the issues could possibly include transitions to new accounting rules, extraordinary items and smoothing mechanisms in pension accounting.

• Survey of Big Investors. Makinson-Cowell interviewed 22 U.S. institutions that collectively manage over $2.5 trillion assets. Reacting to recent accounting scandals, these investors said they don't see the need for major changes in U.S. accounting principles or replacement by international accounting standards. They say U.S., U.K., and IASB standards are all robust systems, but no accounting standards can prevent criminal behavior. They are more troubled by inadequate disclosures, particularly by European companies whose filings are characterized by a lack of detailed reporting by business segment and the undisclosed use of extensive provisions. The more valuable reforms, in their view, would be added disclosure requirements.

The good news is that FASB Chairman Robert Herz told Reuters FASB is forming a new advisory group with representatives from "top mutual fund complexes and Wall St. powerhouses" that will offer advice on projects the board tackles. But the jury is still out on whether another advisory board can make up for the lack of an opportunity for others to comment on potential new projects. In the past, it was FASB's practice to prepare prospectuses on new projects and expose them for public comment.