Financial Accounting Standards Board Chairman Bob Herz said the $64,000 question is, Where are we going with IFRS? as he described plans for FASB and the International Accounting Standards Board to work more closely on uniting U.S. GAAP with International Financial Reporting Standards.
At a Financial Executives International conference in New York, Herz said the ball is now in the SECs court. The SEC is deliberating this fall on the proposed IFRS roadmap that was issued by former SEC Chairman Christopher Cox during the waning days of the Bush administration. FASB and the IASB have decided to meet monthly to try to work out major areas of difference in accounting standards by June 2011 to meet a goal set by the G-20 leaders at a recent summit in Pittsburgh (see IASB and FASB to Meet Monthly on Standards Overhaul).
IASB board member Patrick Finnegan said at the same panel discussion that the IASB wants both the U.S. and Japan to adopt IFRS, noting that the worlds two biggest economies remained uncommitted. Herz, for his part, pointed out that a number of countries continue to use U.S. GAAP.
The two boards have resolved not to get out ahead of each other in issuing many of the most controversial accounting standards in order to avoid "arbitrage" between the two sets of standards by companies. However, the standards they have issued have continued to attract controversy.
The IASB issued the first part of its revision of IAS 39 standards last week for classifying and measuring financial assets at the request of the European Commission. However, the new IFRS 9 standards were greeted with a non-endorsement by the European Commission. Finnegan expressed disappointment with the decision, but noted that the silver lining is that the IASB will have more time to work on the standard in consultation with FASB.
Meanwhile FASB has been continuing its own work on providing guidance on U.S. GAAP to address the concerns of U.S. accounting firms. Herz described the effort as riding two horses. FASB director Russell Golden said, however, that the board would defer its work on SFAS 167 until it can work with the IASB on a converged solution.
Golden noted that FASB often gets questions about whether companies need to reference the new ASUs, or accounting standards updates, in the new FASB Codification when they write footnotes, but he said that isnt necessary.
What wed like you to do is say the company does its accounting for income taxes pursuant to GAAP but not have to cite all those paragraphs, he said.
Golden also noted that FASB had amended its SOP 97-2 standards on software revenue recognition to require fewer hardware products to have their activities accounted for according to their software updates.
He added that FASB has temporarily put aside its work on accounting for loss contingencies, but expects that work to resume shortly.
Weve heard a lot of your comments, a lot of your attorneys comments, and were trying to get on a path where its more an increased disclosure based on actual facts and less predictive information, he said.
Golden also noted that FASB staff would be working on improving disclosures of multi-employer plans because of concerns about underfunding of those plans.
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