The banking and insurance industries have been playing arbitrage with the various accounting standards produced by U.S. and international standard-setters.

The Financial Accounting Standards Board and the International Accounting Standards Board have been working on convergence, but the pressures of the financial crisis have forced both boards to adjust to political pressures on both sides of the Atlantic. Even as they aim at convergence of U.S. GAAP with International Financial Reporting Standards, the two boards have not necessarily been in lockstep together.

FASB Chairman Robert Herz acknowledged at a roundtable this week that FASB’s standards for accounting for loans may end up being tougher than the IASB’s standards, according to Dow Jones Newswires. However, leaders of both boards said they would continue their convergence efforts, although the process for doing so may not be in complete sync.

Meanwhile, banks are asking Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke to use the upcoming G-20 meeting to make FASB and the IASB retreat from their proposals to extend fair value accounting to loans and debt securities (see Bankers Want G-20 to Rein in FASB, IASB). The insurance industry too is objecting to the IASB’s proposals for how to handle insurance contracts and has written to IASB Chairman Sir David Tweedie to express its displeasure (see Insurers Criticize IASB Proposals for Insurance Contracts).

The G-20 meeting in Pittsburgh next week may turn out to be a crucial time for the accounting standard-setters. Federal regulators want accounting standard-setters, regulators and policymakers around the world to coordinate their efforts, so as not to throw the fragile financial recovery off the tracks. Federal Reserve Governor Elizabeth Duke emphasized the importance of global coordination in remarks she made at an AICPA conference in Washington on Monday, according to the Associated Press. James Kroeker, the SEC’s new chief accountant, who also spoke at the conference, expects to see the SEC make a decision about the proposed IFRS roadmap sometime this fall, according to the AP.

No doubt he too will be paying attention to whatever policy announcements emerge from the Group of 20 leaders. Among the major questions the policy makers are expected to discuss is how long governments should continue with their stimulus efforts as the economy shows signs of emerging from the recession. Accounting standard-setters will need to keep a careful eye on these matters as they work on standards that banks and other types of companies will have to use long after the current recession is past.

Jay Hanson, national director of accounting at McGladrey & Pullen and chair of the AICPA’s Accounting Standards Executive Committee, visited the Accountants Media Group offices this week and acknowledged the pressures on the standard-setters. He noted that the banking lobby still holds more sway in the halls of Congress than accounting lobbyists. But as accounting standards converge in one fashion or another in the U.S. and internationally, the accounting industry is going to need to get tougher to make sure that transparent standards win out and that balance sheets properly reflect the value of a company’s assets.