The International Accounting Standards Board and its US counterpart FASB met in London this week to thrash out a work plan that could reduce the severity of the economic downturn cause by the banking crisis.

Both boards agreed to work ‘jointly and expeditiously’ on a series of initiative in areas that have been highlighted as causes for concern. These include off-balance sheet activity, the accounting for financial instruments and loan loss accounting.

The boards pledged to issue proposals to replace their respective financial instruments standards with a common one in a matter of months, rather than the several years it had been expected to take.

‘The G20 and other international bodies have called for standard-setters to seek global solutions to a global crisis,’ said Sir David Tweedie, chairman of the IASB. ‘This is not always easy to achieve and there may be areas where, because of the extent of existing guidance, the two boards find it difficult to reconcile differences in the existing standards in the immediate term.

‘That is why in important areas such as financial instruments a common standard that significantly improves financial reporting and leads to a less complex approach is required. The path to achieving convergence will undoubtedly be challenging but the remit we have from policymakers is clear.’

Further reading

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