International Accounting Standards Board chairman Sir David Tweedie said he won’t wait for the board’s U.S. counterpart to finalize its own revisions to fair value accounting for financial instruments.

Sir David Tweedie

Speaking at a meeting of the European Finance Ministers in Luxembourg, Tweedie promised that he would deliver on his promise to revise the IAS 39 standards on financial instruments by November. After extensive consultation with various stakeholders, the IASB will give companies more flexibility to use historical cost in valuing financial instruments rather than requiring them to use fair value measurement.

That approach would put it at odds with the U.S. Financial Accounting Standards Board, which has been moving toward expanding fair value accounting to encompass loans as well as financial instruments and assets such as mortgage-backed securities. Despite the differences, Tweedie said he believed that the IASB and FASB would still be able to resolve their differences and achieve the Group of 20 leaders’ mandate that they agree on a single set of high-quality accounting standards by June 2011.

The two boards will meet next week to continue their convergence efforts.“Next week, we will meet the FASB to seek to agree [on] an approach leading to a common international standard on financial instruments,” said Tweedie. “While it may have been preferable to have had common timelines with the FASB on financial instruments, the IASB believed that the commitment made to this Council and the conclusion of the G-20 overrode this timing consideration.”

Tweedie noted that the IASB had heard from banks in Europe that they did not want to adopt the U.S. approach on accounting for impaired assets. “I want to emphasize that the alternative of adopting a portion of the FASB approach to impairment, promulgated in April, would not bring about a level playing field,” he said. “Furthermore, on many issues, EU financial institutions would not want us to adopt the U.S. approach on impairment. As I said in June, given the urgency of the fundamental issues surrounding IAS 39, none of us can afford the potential protracted back-and-forth resulting from piecemeal changes in international and U.S. standards that would undermine the comprehensive and desperately needed reform that is under way.”

Despite the differences, he pledged to work with FASB chairman Bob Herz on bridging the gap between the two boards’ approaches. “In our discussions with the FASB aiming to reach a common global approach, we will emphasize our position in favor of a mixed-measurement model over one that requires full fair value measurement on the balance sheet,” said Tweedie. “We will seek to reach common agreement on a forward-looking model for loan-loss provisioning and a simplified hedging methodology. I remain optimistic that we can overcome our current differences. I know that my counterpart at the FASB, Bob Herz, is equally committed to reconciling any differences. To this end, we have enhanced our cooperation over recent months and have stepped up the joint meetings of our boards and staff. We at the IASB recognize the importance of our work on financial instruments, not only in Europe, but globally.”