IASB awaits G20 convergence verdict on modified timetable

US companies hoping for a quick and tidy convergence process between US and international accounting rules had their hopes officially dashed with the release of a revised timetable, yesterday.

The International Accounting Standards Board (IASB) released a “modified” timetable which shelves low-priority projects including its work on financial instruments with characteristics of equity, financial statement presentation, insurance and emissions trading proposals.

The board had been working furiously with its US counterpart, the Financial Accounting Standards Board (FASB), to reach common ground on all their accounting rules by a self-imposed June 2011 deadline.

However the task proved too much for the pair who received concerns from accounting bodies and finance executives, who feared the timetable would leave little time for meaningful responses.

This week IASB chairman Sir David Tweedie and FASB chairman Bob Herz sent a letter to G20 leaders in Toronto identifying projects which will not meet the June 2011 deadline.

The two boards, had been secretly working on an amended timetable for months. The cat slipped out of the bag however when Herz told news agency Reuters on June 1 the two boards were “working on a revised work plan with the IASB”.

The comment forced both boards to accelerate their plans. Within 24 hours the pair issued a statement indicating they would reprioritise some projects. The statement was accompanied by a letter to G20 nations and coincided with a short statement by US Securities and Exchanges Commission Chairman Mary Schapiro supporting the move.

The latest letter to G20 leaders represents the end of that repriotitisation process. The move resulted in some support by the ICAEW, the London based accounting organisation which has been the most vocal of the UK bodies to comment on convergence.

“Stakeholders need adequate time to respond to complex proposals to amend IASB standards and to consider the practical implications,” said Nigel Sleigh-Johnson, head of the ICAEW Financial Reporting Faculty last week.

It remains to be seen how the G20 respond to the new timetable. The group had asked the two boards to “redouble” their efforts to reach convergence when they met in Pittsburgh in September 2009.

It’s also unclear how the move will be interpreted by US companies, still wary of handing over their accounting setting powers.

There was one ray of sunshine this week as the boards released a joint draft standard on revenue recognition, described by Sir David as “It is an important step towards a single global principle-based standard”.

Further reading:

Tweedie’s third way could help bridge the rules gap

The long and winding roadmap