The International Accounting Standards Board (IASB) and its U.S.-counterpart, the Financial Accounting Standards Board (FASB), recently announced a delay in their accounting standards convergence schedule. While the original plan was to complete convergence work by June, the boards voted to delay the target for completion to the second half of 2011, although the U.S. insurance standard is targeted for even later, in the first half of 2012.
The two boards have been hard at work, erasing the boundaries between International Financial Reporting Standards (IFRS) and U.S. generally accepted accounting principles (GAAP). However, in their most recent progress report, the boards announced their decision to allot more time to complete the work of converging the two standards into one, cohesive global version.
“Today we are reporting further substantial progress on our work to improve and align international and U.S. accounting standards, while providing additional time to finalize the remaining convergence projects,” said Sir David Tweedie, chairman of the IASB. “The convergence program continues to raise the standard of financial reporting worldwide, delivering much-needed improvements in key areas and providing a solid platform for global high quality standards.”
In their report, the IASB and FASB also announced that they had completed five other projects which would yield new standards in the next few weeks. They will also jointly issue new requirements in relation to fair value measurement, and put three remaining memorandum of understanding (MoU) projects on priority. These MoUs cover financial instruments accounting, leasing and revenue recognition, while aiding the boards’ joint mission to converge IFRS and GAAP.
“The progress report highlights the many areas where we have already improved and converged our standards, and our plans for completion of the priority projects,” said Leslie Seidman, chairman of the FASB. “We have also clarified our plan to continue to engage stakeholders in the remaining steps of the process, and give them an opportunity to review the draft standards before they are finalized.”
The process of merging IFRS and GAAP could have ramifications on how commercial creditors read financial statements for public companies.
Jacob Barron, NACM staff writer