The Financial Accounting Foundation, which oversees the Financial Accounting Standards Board and the Governmental Accounting Standards Board, is coming out in support of a proposal to create a new Accounting Standards Advisory Forum of international standard setters, but is balking at a requirement that participants need to make a commitment to International Financial Reporting Standards.
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The IFRS Foundation, which oversees the International Accounting Standards Board, has proposed the creation of the new forum as a way to create a multilateral group that will advise the IASB on the future development of International Financial Reporting Standards. As FASB and the IASB near the end of their 10-year memorandum of understanding for converging U.S. GAAP with IFRS, standard setters in countries outside the U.S. have pushed for greater involvement in the process and are impatient with the Securities and Exchange Commission for not making a decision to support IFRS for use by U.S. companies. FASB chair Leslie Seidman has expressed interest in the new forum, but the board has not yet made a commitment to join it (see FASB Expected to Participate in New IASB Accounting Standards Group and FASB Chair Looks to New IASB Relationship).
However, a comment letter sent Thursday to IFRS Foundation chairman Michel Prada by FAF chairman Jeffrey J. Diermeier in response to the proposal indicates support for the new forum, with some reservations. “The FAF Trustees believe that the IFRS Foundation’s proposal to establish an Accounting Standards Advisory Forum (ASAF) comprising standard setters from around the world represents a constructive opportunity to share technical perspectives and promote a much higher level of cooperation among accounting standard setters,” Diermeier wrote. “The ASAF, as proposed by the IFRS Foundation, would create a formal mechanism for standard setters and other regional bodies to convene to ‘provide advice and views to the IASB on major technical issues related to its standard-setting activities and to provide input on national and regional issues.’ We concur that timely and in-depth discussion of technical issues by a group of highly competent standard setters could help promote the development of high-quality global accounting standards.”
Diermeier suggested that such a group could also become a useful forum for not only advising the IASB on its proposals, but also for sharing potential agenda items, research, proposals and finding among national standard setters. The new forum would serve as an interactive roundtable where representatives could discuss issues that are not currently on the IASB’s agenda, but might be under consideration by other standard setters.
Diermeier argued that the membership of the ASAF needed to include jurisdictions representing the world’s major capital markets, even if they have not made a specific commitment to support IFRS, as the SEC has not in the U.S.
“Requiring a written commitment to a single set of standards written by the IASB, in full and without modification, would exclude many jurisdictions from membership, including those where the standard setter does not have the final authority to adopt or endorse IFRS; those where IFRS has been adopted but has been modified; and those—including the United States—where no decision has been made regarding adoption or endorsement of IFRS,” he wrote. “If an overarching goal of the ASAF will be to inform and improve IFRS for potential future use by such jurisdictions, we would encourage changes to the commitment that would allow the broadest possible participation in the ASAF process.”