IASB and FASB Tout Their 'Norwalk Agreement'

Accounting standard-setters and regulators in the U.S. and Europe jointly announced an agreement to stamp out differences in accounting standards. The pact was reportedly made in Norwalk, Connecticut last month by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Under this "Norwalk agreement," FASB and IASB jointly agree "as a matter of high priority" to remove any differences between their standards that remain at January 1, 2005.

Reactions among users of financials statements are lukewarm at best. Some accountants may view this approach as a troublesome departure from the normal process for setting U.S. accounting standards, while investors may see it as an untimely distraction from the more urgent resolution of today's crisis of confidence in the capital markets. Asked whether international convergence is an appropriate use of FASB's time, the board's advisory council reacted with a "Yes, but. . ." Examples of comments:

  • "We should see that convergence focuses on issues that are really important to global investors. . . The capital markets have worked fine with IAS standards even though they are not comparable to U.S. GAAP. . . Is it possible that this is principally a regulatory problem?"
  • "Until the IASB proves its ability to deliver high-quality standards, it is important for the FASB to be strong. This requires a full review and revision of the FASB's processes and governance mechanisms."
  • "Given current events and the general rethinking of the way we manage financial reporting, I think the Board should focus on redesigning itself and its approach to better serve the public interest."

FASB is scheduled to discuss the other priorities suggested by the council in December. Meanwhile, the markets faltered as consumer confidence in the U.S. dropped to its lowest level since 1993, and the New York Times published a "slice of Americana" in a letter from a lady in Swarthmore, PA. She said, "The administration wants me to have confidence in the stock market, and then it approves to a new board overseeing the accounting profession the appointment of a nice man with no pertinent experience (William H. Webster) while overlooking the guy (John H. Biggs) whose best reference is the fact that the accounting lobby doesn't want him! My money is safely back in the mattress."

-Rosemary Schlank

You may like these other stories...

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...
Inversions: Loophole Is the ProblemJacob J. Lew, the U.S. Treasury Secretary, published an opinion piece in the Wall Street Journal that "the system has become full of inefficiencies and special-interest loopholes. That...
School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
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.