International Accounting Standards Board Chairman Sir David Tweedie said that the U.S. Financial Accounting Standards Board would still continue to play an important role in the standard-setting process, even after the transition to International Financial Reporting Standards in the U.S.
The Securities and Exchange Commission has proposed a roadmap for public companies to begin moving from U.S. generally accepted accounting principles to IFRS starting in 2010. The IASB and FASB have been working closely together on convergence projects to unite the two sets of accounting standards.
"FASB's not going away," said Tweedie at a seminar sponsored by Pace University's School of Business at Ernst & Young's Times Square offices. He told the moderator, New York Times chief financial correspondent Floyd Norris, that FASB has been one of the most helpful national accounting organizations and that the two groups have been borrowing parts of each other's standards as they continue the convergence process.
"If it's a better standard, we take it," he said. He cited the U.S. GAAP standard on discontinued activities as one example. He also noted that he typically received helpful feedback on the accounting standards that the IASB has been developing from U.S. standard-setters.
"FASB and us should protect each other," he said. "If one of us goes, the other does as well. FASB and IASB move together."
He said that in 2011, he expects to have U.S. standards and international standards "in the same ballpark."
In contrast, he noted that some accounting associations have been less than helpful and singled out France. Tweedie recently came close to resigning after the IASB came under pressure from the French government to amend International Accounting Standard 39, which covers the recognition and measurement of financial instruments, to allow some companies to reclassify financial instruments so as to avoid fair value measurement (see Pressured IASB Chairman Considered Resigning). The IASB buckled in and passed the amendment without its normal due process. However, Tweedie said he would have preferred to make IAS 39 simpler and tougher and give companies fewer opportunities to put assets in different categories.
"We want to return accounting to the profession," he said. "With IAS 39, if you understand it, you haven't read it properly."
Tweedie said that some countries that claimed to be implementing IFRS really are not, and that he wants to call attention to those countries.
Tweedie also said he planned to set up a group next year that would report on what the IASB has learned from the financial crisis. Among the findings will be lessons learned about procyclicality, which some have blamed for exacerbating the financial crisis. In addition, he said the IASB would publish a “stripped-down” 250-page version of IFRS for small and midsized businesses. “This will cover 95 percent of small companies and we expect to publish it next year.”
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