Changes in accounting standards, rules, and policies for financial institutions must be coordinated globally in the effort to help avoid a recurrence of the economic crisis, federal regulators said Monday.

"Now that some measure of confidence has been restored and financial strains are receding, it is time to turn our attention to the lessons learned in the crisis," Fed Gov. Elizabeth Duke told an accounting industry audience on the first anniversary of the collapse of Lehman Brothers, the day before it filed for bankruptcy. "Accounting standard setters, regulators, and policymakers around the world are discussing and proposing preventative measures. Now the challenge lies in integrating those changes smoothly and seamlessly."

President Barack Obama is speaking on Wall Street to detail steps the government has taken to bring the economy back from the precipice, and to discuss plans to wind down the government's role in the U.S. financial sector.

James Kroeker, the chief economist at the Securities and Exchange Commission, said the financial crisis that erupted last year "has highlighted for us the importance of global solutions, even on an accounting front, to complex issues."

Kroeker, who also addressed the gathering of the American Institute of Certified Public Accountants, noted differing approaches on so-called mark-to-market accounting rules between the U.S. standard setter, the Financial Accounting Standards Board, and European standard setters. The rules compel banks to value assets on their balance sheets at current market prices even if they plan to hold them for years.

Still, Kroeker said, "Their differences at this point are more one of degree."

The Obama administration recently proposed stricter international standards for the capital reserves that banks are required to hold as a cushion against potential losses. The plan would require higher capital reserves for firms deemed to be so large and interconnected they pose a threat to the overall stability of the financial system.

Duke said the more stringent standards could constrain the availability of credit if they are accompanied by accounting standards that make it difficult for banks to rid their balance sheets of loans by selling them as securities.

Even with the economy recovering, banks' extension of credit isn't yet up to the level needed to fully pump up growth, said Douglas Duncan, chief economist of mortgage finance company Fannie Mae, which was seized by the government last September along with sibling company Freddie Mac.

The banking industry "has a long way to go to support the expansion," Duncan said at the conference.

Duncan said he thinks the recession is over, but that "it will be a mild recovery."

The SEC in August proposed a plan to allow all public companies to begin using international accounting standards for reporting financial results in two years. The agency may require them to do so starting in 2014.

The SEC's push toward acceptance of a single, global accounting standard has raised objections from some investor advocates and key lawmakers. Supporters - including Wall Street interests and the accounting industry - say it makes sense in an era of increasingly globalized financial markets and would help lure foreign companies to U.S. markets.

The international financial reporting standards, or IFRS, would replace the U.S. standards known as generally accepted accounting principles, or GAAP. U.S. public companies would have the option of adopting the international standards starting next year.

Most of the comment letters on the proposal received by the agency show support for the idea "of moving to a single set of high-quality accounting standards," Kroeker said. However, many are "fairly downbeat" about being able to adopt the international standards soon, he added.

Duke, who is a member of the Fed panel that sets interest rates, and Kroeker said they were expressing their own views and not representing their agencies' position.

Reprinted from our sister site, FinReg21.