PracticeAuditRoad to global standards agreed

Road to global standards agreed

IASB and US counterpart signed memorandum of understanding

Details of a work programme that will remove the requirement for US-listed
companies using international financial reporting standards to reconcile their
accounts to US GAAP have been unveiled today.

The International Accounting Standards Board and its US counterpart have
signed a memorandum of understanding, which lists six-short term and 11
long-term projects that will enable costly reconciliation requirements to be
dropped.

The agenda has been agreed with by both the US Securities and Exchange
Commission and the European Commission, and could see UK companies filing
unchanged IFRS accounts as early as 2008.

IASB chairman Sir David Tweedie said the agreement represented a ‘massive
change’ from previous stated objectives, as the SEC no longer requires the
standards to be the same to remove reconciliation.

He added that he expects US and international standards to be ‘virtually
identical’ by 2011.

The agreement fleshes out the roadmap established by the US and European
regulators last year, which had initially raised concerns within the IASB over
what would be required of them.

As part of the discussions, which have been taking place over the last few
months, it was decided that instead of trying to converge current standards, the
board would work together to create new standards. Topics such as financial
instruments, revenue recognition and pensions will follow this path and the SEC
is not expecting to see much more than the publication of discussion papers on
the standards in the proposed timeframe to meet its requirements.

The list of IASB projects in full is:

Short-term convergence: 

– Borrowing costs
– Impairment
– Income tax
– Government grants
– Joint ventures
– Segment reporting

Long-term joint projects:

– Business combinations
– Consolidations
– Fair value measurement guidance
– Liabilities and equity distinctions
– Performance reporting
– Post-retirement benefits (including pensions)
– Revenue recognition
– Derecognition
– Financial instruments
– Intangible assets
– Leases

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