Standard setters seek swift solution to financial crisis

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.’

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