Hit List Picked For Fast-Track FASB/IASB Convergence

The Financial Accounting Standards Board (FASB) has reached into its vast reservoir of U.S. accounting standards and drawn up a hit list of 17 topics targeted for fast track convergence with international standards. The winning topics in this lottery are not necessarily the U.S. rules most likely to be scrapped, just those that lend themselves most readily to fast decision-making.

Under the tentative game plan for next six months, FASB will examine the topics one at a time and either make the decision to switch to the standard chosen by the International Accounting Standards Board (IASB) or throw the topic back into the hopper for later consideration.

The pivotal question on the decision tree will be: "Is IASB's method better than, or at least as good as, the U.S. standard?" If the answer is "Yes," FASB plans to propose a change to IASB's method. If the answer is "No" or "Needs more study,"” the topic will go back into the hopper until its number comes up again at a later time.

The 17 topics are as follows:

  1. Classification of liabilities upon a refinancing
  2. Classification of liabilities payable on demand due to breach of borrowing agreement
  3. Voluntary changes in accounting principles
  4. Distinction between changes in accounting principles and changes in accounting estimates
  5. Inventories – idle capacity and spoilage costs
  6. Nonmonetary asset exchanges
  7. Financial instruments: disclosure, presentation, recognition and measurement
  8. Interim reporting
  9. Research and development
  10. Discontinued operations
  11. Costs associated with exit or disposal activities
  12. Government grants
  13. Depreciation on assets held for disposal or idle assets
  14. Income taxes
  15. Long-term construction contracts
  16. Financial reporting in hyperinflationary economies
  17. Joint ventures and the proportionate consolidation method

This is one of those projects where the trees are easier to see than the forest. The specific issues up for reconsideration within each of the above topics are apparently already quite well defined. In contrast, the objectives of the project still seem to have some rough edges.

The board appears to be divided in its views about whether the goal is to conservatively eliminate differences where possible without taking up excessive amounts of time and resources, or to aggressively wipe out as many differences in standards as possible over the next six months, or to be considerate and avoid creating all sorts of rolling changes for the millions of users of U.S. accounting principles as they exist today.

You may like these other stories...

Read more from Larry Perry here and in the Today's World of Audits archive.Learning "how" to audit cash is mainly learning "when" to audit cash and to "what extent" cash auditing procedures...
Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.