Hans Hoogervorst, chairman of the International Accounting Standards Board, reportedly told an audience in Singapore last week that full convergence is no longer an achievable project.

The Business Times in Singapore reported the remarks last week in discussing why the IASB was unable to come together with the U.S. Financial Accounting Standards Board on the financial instruments standard they had been working to harmonize in U.S. GAAP and International Financial Reporting Standards for over a decade.

“The FASB decided to stick to current American practices and leave the converged position," said Hoogervorst at the Singapore Accountancy Convention last Thursday. “It’s a pity. Convergence would have allowed the U.S. to make the ultimate jump to IFRS. But nobody can force it to do so; if it wants to stick with US GAAP, that’s its choice. But IFRS moves on—we have a large part of the world to take care of.”

Unfortunately the full text of the article is only available to subscribers to the publication, and the IASB has not posted a transcript of Hoogervorst’s speech, as it often does. According to an IASB spokesman, though, Hoogervorst spoke from his own notes rather than a prepared speech, and the comments about convergence came in response to a question from the audience.

Still, it should come as no surprise that Hoogervorst feels this way. Although the IASB and FASB managed to come together and produce a mostly converged standard for revenue recognition in May, they have yet to produce converged standards for their other major joint projects: financial instruments, leasing and insurance contracts. Last month, the IASB appeared to finally give up on trying to reach agreement with FASB on the important issue of how to treat impaired bank loans and credit losses, releasing the final elements of its IFRS 9 standard on financial instruments (see IASB Releases Its Own Financial Instruments Standard).

FASB’s “current expected credit loss” model would require companies to reflect on day one when they put a loan on the balance sheet any losses they expect to incur over the lifetime of the loan, even if the loan is fully performing. In contrast, the IASB’s expected credit loss model only would require impairments when there are signs of deteriorating credit quality.

Unlike the case with the revenue recognition standards, the IASB also set up its own transition resource group to help companies and their accountants adjust to the new standards, instead of the joint group that FASB and the IASB formed for the revenue recognition standards.

In a project summary, the IASB acknowledged the work that it had done with FASB since they signed an agreement in 2002 to converge accounting standards. “The IASB has worked closely with the FASB throughout the development of IFRS 9. Although every effort has been made to come to a converged solution, ultimately these efforts have been unsuccessful. Throughout the lifecycle of the project the IASB has consulted widely with constituents and stakeholders on the development of the new standard.”

FASB, for its part, is forging ahead with development of its own financial instruments standard under U.S. GAAP and expects to issue a final standard by the end of the year.

The two boards also remain at odds over key parts of the leasing and insurance standards, and the prospects of them coming together look uncertain. FASB chairman Russell Golden has said the board’s priority will be to improve U.S. GAAP, but it is continuing to work with other regional and national standard-setters through an international group that the IASB set up, known as the Accounting Standards Advisory Forum, providing input to the IASB on developing International Financial Reporting Standards. However, the days of FASB and the IASB collaborating closely together on a one-on-one basis to converge U.S. GAAP and IFRS appear to be at an end.

Do you think FASB and the IASB should still work on converging accounting standards?