Thursday, May 24, 2012

IASB, FASB link arms on financial instruments

Tweet

By most reports, the Financial Accounting Standards Board and the International Accounting Standards Board made good progress during their joint meeting Oct. 26 - 28 in Norwalk, Conn.

So much so, that the two boards agreed to meet jointly more often in 2010.

"We seem to be more effective and efficient when we meet and discuss" issues face to face, FASB Chairman Robert Herz said, as reported by BNA staff correspondent Steve Burkholder, who was one of three reporters who covered the joint meeting for BNA Tax & Accounting's  Accounting Policy & Practice Report. 

Rather than twice or three times a year, which has been the norm, the two boards agreed to try to meet as often as monthly in either face-to-face sessions, or via videoconferencing.

The goal is to get more quickly to a "converged solution," specifically in their financial instruments project, in which the two boards have taken different tacts on classification and measurement of instruments.

To avoid that in the other aspects of the financial instrument project -- accounting for impairments and hedging activities -- joint meetings may in fact be helpful.

In the current economic malaise, there continues to be a great deal of pressure on FASB and IASB over financial instrument accounting. Banking regulators in particular are less than supportive of their efforts.  A united effort by IASB and FASB is likely to make it harder to play the two boards against each other, a point suggested obliquely by the two chairman.

Putting a sharp point on the issue, FASB Chairman Herz, in a Oct. 29 speech before the New York Society of Security Analysts' said he is "concerned about the continuing effort to politicize the accounting standards on . . both sides of the Atlantic."

Herz also reemphasized a point accounting standards setters have been making for a while now, that bank regulators should not try to alter accounting standards to accomplish financial system prudential goals.

Maybe linking arms will help.  What are your thoughts?

— Susan Webster, Managing Editor, Accounting Policy & Practice Report

All BNA publications are subscription-based and require an account. If you are a subscriber to the BNA publication and signed-in, you will automatically have access to the story. If you are not a subscriber, you will need to sign-up for a trial subscription.