The National Association of State Boards of Accountancy has written a
The contribution, to be made in up to three payments of $1 million during 2014, is intended to support the IFRS Foundation’s standard-setting body, the IASB, during the period that it is completing work on four joint accounting standards projects underway with FASB (see
In a meeting Wednesday, FASB’s board members reportedly voted to step back from the efforts to converge the accounting standards for insurance contracts, according to the
In the
“This funding decision appears to have been made without the usual transparency and due consideration of stakeholder input that have historically been hallmarks of FAF practice,” NASBA chair Carlos Johnson and president and CEO Ken Bishop wrote to FAF chairman Jeffrey Diermeier and president and CEO Teresa Polley. “This divergence from typical FAF policy of openness is concerning as we would have expected FAF to follow the same openness policies it mandates of its own standard setting boards.”
The NASBA officials also said they were concerned that the
NASBA also questioned the role of the Securities and Exchange Commission, which the press release claimed had consulted with the FAF on the contribution.
“Does this contribution, ostensibly for the purpose of completing convergence projects, signal that the SEC and FAF have implicitly agreed that continued convergence is open-ended, or conversely, that, with funds being redirected to IASB, the option of IFRS for all publically-traded companies is on the horizon?” Johnson and Bishop wrote.
When asked to comment on the letter, FAF spokesman Robert Stewart said, “We respect and welcome the views of all of our stakeholders and we appreciate that NASBA took the time to share with us its thoughts on this important issue.”
NASBA said in the letter it is concerned that the FAF’s action “only adds confusion and uncertainty to the ongoing dialogue regarding the future of accounting standard-setting in the United States. With the SEC’s Final Staff Report in 2012, it seemed that stakeholders had accepted the notion that the FASB would remain as the U.S.’s sole accounting standard setter. This funding decision could reopen what has been a very contentious debate for the past decade.”
The letter does not mention, however, the
“Another result of the lack of a publicly sponsored funding arrangement is that the U.S. has to date not contributed a proportionate amount to the IFRS Foundation’s budget,” the IFRS Foundation wrote. “Currently, a proportionate U.S. contribution based on GDP (the primary indicator used by the IFRS Foundation to assess the funding expectations of a country) would amount to just over £4 million [$5.48 million], however, only £1.3 million [$1.78 million] is currently expected to be collected from U.S. sources in 2012. We note that, while around 2025 percent of the total seats in the Foundation’s different bodies are currently held by the U.S., the U.S. contributions amount to less than 10 percent of the total country contributions to the Foundation’s budget. Ultimately the lack of public funding in the U.S. can only be resolved by the U.S. authorities themselves, directly or indirectly.”
NASBA said its position aligns with the SEC’s current strategic plan in which the SEC said it would “strengthen and support the FASB’s independence and maintain the focus of financial reporting on the needs of investors. Due to the increasingly global nature of the capital markets, the agency will work to promote higher-quality financial reporting worldwide and will consider, among other things, whether a single set of high-quality global accounting standards is achievable.”
NASBA insisted it would continue to support the work of the FAF and FASB, even though it was puzzled by the recent action.
“Though we are bewildered by what is left unsaid in the press release on January 28th and the lack of specificity as to the reasoning for the $3 million contribution, we remain fully supportive of the FAF and its mission. We simply request that more transparency be considered in matters such as the contribution to the IFRSF. We also continue to support the efforts of FAF and FASB to utilize a disciplined approach towards alignment of GAAP and IFRS, when it is practically possible.”