Officials from the Financial Accounting Standards Board and the International Accounting Standards Board spoke recently about the path forward on harmonizing U.S. GAAP with International Financial Reporting Standards as the two boards near the end of their convergence efforts.
While the two boards managed to produce a mostly converged standard on revenue recognition earlier this year, key elements of the leasing and financial instruments standards still differ, and they remain far apart on their insurance project.
"Next month, we will probably have our last meeting with the FASB on the leasing standard," said IASB vice chairman Ian Mackintosh at the American Institute of CPAs' Conference on Current SEC and PCAOB Developments in Washington, D.C., in mid-December. "We have not reached agreement on every aspect, but we are 100 percent converged on the fundamental issue, which is that leases are present obligations that need to be recognized as liabilities on the balance sheet. With the end of the leasing project, we will reach the end of a decade of work on our convergence projects. In that decade, the bilateral relationship between the FASB and the IASB dominated much of our work programs. So the question is: How do we take it from here?"
Mackintosh, who substituted for IASB chairman Hans Hoogervorst as a speaker at the conference, noted that about two years ago, the IASB founded the Accounting Standards Advisory Forum. The ASAF brings together 12 national and regional accounting standards bodies. "It heralded a new, multilateral setting for our standard-setting, which properly reflects our identity as an international body," said Mackintosh, speaking alongside FASB's chairman, Russell Golden. "Still, both Russ and I believe that the bilateral relationship between the FASB and the IASB needs to remain strong. We have a joint responsibility to protect the body of convergence that has been reached and to minimize differences in the future. Convergence was not a perfect process but it was a good one and we achieved a great deal. The similarities between the two sets of standards are bigger than the differences. We both work in the same public interest, serving the needs of investors in public capital markets. For all these reasons, the IASB looks forward to continue working closely with the FASB."
Golden emphasized that FASB's first priority is to improve GAAP for those who use it, in the U.S. and abroad. "Even as we remain committed to the ideal of global convergence, we -- and other national standard-setters -- must address the pressing needs of users, preparers and practitioners in our individual capital markets," he said. "In addition to the work we continue to undertake with the IASB, we also are strengthening our existing relationships with other standard-setters. This will help promote the broader flow of information and ideas that mutually inform each other's thinking and contribute to an environment that will foster greater convergence."
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