IASB and FASB increase convergence pace

The US and international accounting rule makers will redouble their efforts
to converge their two sets of rules, now meeting monthly to make their June 2011

The International Accounting Standards Board (IASB) and the Financial
Accounting Standards Board are working feverishly to harmonise their two
accounting languages, with a view to form truly global accounting rules, if the
US adopts the rules.

Speaking to an audience of accountants in New York, IASB chairman Sir David
Tweedie was confident he could meet the 2011 deadline, reaffirmed at the recent
G20 meeting.

“We’re going to work on these issues together every month…That’s why we think
we’ll make our June 2011 target date,” he said.

The pair have significant hurdles to jump. They each are proposing different
fair value standards – measurement rules which force companies to value assets
at their market value. The rule was blamed for exaggerating the effects of the
financial crisis as assets, especially financial instruments, lost close to all
their value in stagnant markets.

FASB is proposing a model which values all assets at fair value. The IASB is
proposing a mixed measurement model which will see banks’ loan books valued at
amortised cost.

The two standard setters are keeping their draft converged standards under
lock and key to avoid sending mixed messages.

“If we have different words, people will start interpreting them
differently,” Tweedie said.

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and FASB to Meet Monthly on Standards Overhaul

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