FASB, IASB Modify Convergence Timetable In Response To Stakeholder Concern
June 8, 2010
On June 2, 2010, the Financial Accounting Standards Board and International Accounting Standards Board announced that they are modifying the timetable set forth in the FASB-IASB Memorandum of Understanding (MoU) for completion of major convergence projects, to extend some projects beyond the most recently amended deadline of June, 2011. See Joint Statement by the IASB and FASB on Modifying Their Convergence Work.
According to the Joint Statement:
“As noted in our March 2010 progress report, we recognize the challenges that arise from seeking effective global stakeholder engagement on a large number of projects. Since publishing the March progress report, stakeholders have voiced concerns about their ability to provide high-quality input on the large number of major Exposure Drafts planned for publication in the second quarter of this year.”
Among letters provided by “stakeholders” are the following letters sent by two FEI committees:
· April 30 letter sent by FEI’s Committee on Private Company Standards to the chairman of the Financial Accounting Foundation (which oversees FASB) and the chairman of FASB; and
· May 7 letter sent by FEI’s Committee on Corporate Reporting to the chairmen of FASB and IASB.
Letters sent by other constituents to FASB on this matter can be found here.
G-20 Finance Ministers Informed
Concurrent with issuing their joint statement, FASB and IASB also issued a letter to the minister of finance of the Republic of Korea, host of the G-20 Finance Ministers meeting, which took place June 4-5, to inform them of the modification to the MoU.
SEC Chairman Reacts
In a June 2 statement, U.S. Securities and Exchange Commission Chairman Mary Schapiro said:
"The [FASB and IASB] boards believe that the modified plan will contribute to increased quality in the standards because it provides additional time for stakeholders to thoroughly consider the proposals and give both boards quality feedback. I view this as time that is well invested.
"Quality financial reporting standards established through an independent process are threshold criteria against which the commission's future consideration of the role of IFRS in the U.S. reporting system will be based. I foresee no reason that the adjustment to the targeted timeline for certain joint projects should impact the staff's analyses under the work plan issued in February 2010, particularly when that adjustment is designed to enhance the quality of the standards. Indeed, focused efforts on those standards the boards consider highest priority for the improvement of U.S. GAAP and IFRS will facilitate the staff's analyses.
"Accordingly, I am confident that we continue to be on schedule for a commission determination in 2011 about whether to incorporate IFRS into the financial reporting system for U.S. issuers."
Read more in this KPMG Defining Issues.
Prepared June 8, 2010 by Edith Orenstein, Director of Accounting Policy Analysis and Communications, Financial Executives International. This summary does not reflect FEI opinion unless specifically noted above.