KPMG: IFRS standards in first main test

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New standards released yesterday by the IASB have been hailed as a positive
step towards convergence between IFRS and US GAAP.

The release of the
International Accounting
Standards Board
‘s (IASB’s) new standards on business combinations and
non-controlling (minority) interest is the result of IASB’s and USA’s Financial
Accounting Standards Board’s (FASB’s) first comprehensive test-case in their
joint efforts to achieve convergence between IFRS and US GAAP, Mary Tokar, head
financial reporting group, says.

‘The fact that the standards are very similar is a further step towards
greater consistency between IFRS and US GAAP,’ she said. ‘Although not 100%
identical, the two boards worked to reach agreement not just on concepts and
principles, but also on using the same wording.’

Tokar noted the international standards required less change for IFRS users
than for companies reporting under GAAP. This was partly because of the option
available in the international standards, but not in the US standards, to limit
the recognition of goodwill to the controlling interest acquired.

It was also because the boards drew on the IASB’s current business
combinations standard, which was issued after the comparable US standard. In
several areas existing IFRS requirements were the starting point for the two
boards. ‘The boards were able to build on progress made to date in a way that
reduces the degree of change required for IFRS preparers,’ Tokar said.

Further reading:

IASB draft leaves SMEs in the cold

Banks eye US accounting standards

Related reading

Fiona Westwood of Smith and Williamson.