FASB and IASB Set Goals for Convergence

Acknowledging the role of their convergence project in the ‘roadmap’ to removing reconciliation requirements for non-US companies registered in the US, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) released a joint memorandum of understanding (MOU) on Monday that lists 11 specific areas where progress is to be achieved by 2008. At the same time, the two boards say in their memo that “the ability to meet the objective set out by the roadmap depends on the efforts and actions of many parties – including companies, investors, standard-setters and regulators.”


Advertisement


Low Cost Accounting Software Support

Provider of low cost support, consulting, training and custom report writing for MAS 90, MAS 200 and MAS 500 accounting software systems. Call us toll free at 1-866-762-3990 to learn how we can help. http://www.saveonsupport.com


The ‘roadmap’ referred to in the MOU is an agreement reached between the Securities and Exchange Commission and the European Union Internal Market Commission last April that the SEC would accept International Accounting Financial Reporting Standards (IFRS) developed by the IASB as comparable to US Generally Accepted Accounting Principles (GAAP) by 2009.

IFRS became mandatory for European companies as of January 2005 and 8,000 firms are now preparing their first set of financial reports using those standards, Reuters says. The SEC has been under pressure from Charlie McGreevey, EU Internal Market Commissioner, to eliminate the reconciliation requirement sooner than 2009, but US regulators say that the EU must first prove that is can apply and enforce the new standards, Reuters reports.

The MOU establishes guidelines for the two boards’ work on convergence, noting that it is a better use of the standards setting boards’ time to establish new standards where both the old FASB and IASB standards are in need of improvement. With an overall goal of achieving “measurable progress” by 2008, the joint press release says, the boards will determine where major differences can be eliminated through short-term standard setting projects, and both FASB and IASB will make continued progress in areas already identified as in need of improvement.

The FASB and IASB do not commit to completing the short-term projects listed in their memo because of the need for “research, deliberation, consultation and due process” but will consider measurable progress as fulfilling their contribution to the roadmap, the MOU says. In addition, IASB notes its responsibility to provide “stability of its standards for users and preparers in the near term.”

Sir David Tweedie, Chairman of the IASB commented in the join press release, “The pragmatic approach described in the MOU enables us to provide much-needed stability for companies using IFRSs in the near term, while taking advantage of a once-in-a-lifetime opportunity to contribute to removing the need for reconciliation requirements.” Robert Herz, Chairman of FASB said that the MOU “underscores our strong commitment to continue to work together with the IASB to bring about a common set of accounting standards . . . enabling the world’s capital markets to operate more efficiently.”

You may like these other stories...

By Jason Bramwell The board of trustees of the Financial Accounting Foundation (FAF) finalized a new policy on November 19 that provides the Governmental Accounting Standards Board (GASB) with direction on what...
By Jason Bramwell The Governmental Accounting Standards Board (GASB) is now offering a free online toolkit designed to assist preparers and auditors of state and local government pension plans with implementing new...
By Steven Brenner With the news that the Financial Accounting Standards Board (FASB) – in conjunction with the International Accounting Standards Board (IASB) – intends to formally move...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.