Standards boards clash over convergence project
A project to develop the first accounting standard on acquisitions that is the same in the US and internationally could be derailed after American standard-setters suggested using different language.
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The International Accounting Standards Board is developing its Business Combinations Phase II standard with the help of its US counterpart. The aim is to produce a standard that uses identical language both in the US and across the rest of the globe.
But at last week’s IASB meeting, representatives of the US Financial Accounting Standards Board raised the possibility of drafting two different standards. The Americans indicated that they would be willing to proceed with two standards that were written in different language, but that kept the same principles.
However, the IASB voiced its concerns over this approach, given that the stated intention of the project was to issue a single document.
Kevin Stevenson, director of technical activities at the IASB, said that the board was simply expressing a preference over some definitional matters and transitional provisions, and the debate was not a major issue.
During the meeting with FASB staff, the issue of the definition of a business combination was also discussed.
Currently, the IASB and FASB definitions are divergent and, it was agreed, in need of improvement. But it seems likely that the IASB will move towards the FASB definition, after indicating its willingness to do so during the meeting.