Accounting Regulators Clear Path to Standards Convergence
Regulators in the U.S. and Europe are working to reconcile U.S. GAAP with International Financial Reporting Standards so that everyone will soon be using the same set of standards. Read this article on the recent move by the Financial Accounting Standards Board to help facilitate this unification.
In an effort to further facilitate the move from Generally Acceptable Accounting Standards to the International Financial Reporting Standards, the Financial Accounting Foundation board of directors has cut two positions from the Financial Accounting Standards Board, effective July 1.
CFO.com reports the foundation also voted to give more power to the standards board's chairman:
Another of the most debated changes approved by the trustees will vest the FASB chairman, currently Bob Herz, with the authority, “following appropriate consultation,” to set the board’s agenda, project plans, and priority of project plans. Currently projects are added to or, in rare cases, dropped from the agenda via a full board vote.
The changes were made in spite of heavy opposition, the story says. Critics fear that cutting FASB membership from seven to five members will not increase efficiency in standard setting. They believe it will limit the standards board’s ability to reach out to its constituents since fewer members will be “shouldering the ever increasing workload.”
But the overarching concern, according to foundation trustees quoted here, is to actively move toward convergence of GAAP and IFRS:
“We took action very much with an eye toward convergence,” [FAF Chairman Robert] Denham said. Timothy Flynn, chairman and chief executive of KPMG and a FAF trustee, said that to bring in new members during the convergence process “might slow the process down.” … Some commenters urged the trustees “to wait until we had a clear path and timetable for convergence,” said Denham. “That suggests that we should be passive. We believe we should be an active participant and work to create the path.”
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Lora is an attorney and journalist who covers regulatory and legislative issues for IT Business Edge's Managing Compliance Standards weekly report. Visit her blog, Sarbox Survival Guide, to learn about audit and governance steps to manage the compliance maze and actually improve the business.