Friday, June 3, 2011

Standards Boards Differ on Implementation Approach

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Even if the Financial Accounting Standards Board and the International Accounting Standards Board can agree on exactly what to merge in their standards, there still will be much work to do on how and when to do it, Accounting Policy and Practice Report discovers.

A recent videoconference of the boards showed members differed whether upcoming converged standards should be given a single effective date (the “big bang” approach) once finalized, or a more gradual, sequential transition to effective dates (the “splatter” method). Some who want the standards effective on a single date are suggesting Jan. 1, 2015. Others favoring the more sequential approach are suggesting an effective date of either 12 or 15 months after each the converted standard has been completed.

For now, it seems several more weeks of staff work could be needed before the boards decide what implementation path to pursue. Also at issue is whether standards should be implemented retrospectively or prospectively. If the boards decide they want retrospective application of a new, converged standard, entities are going to have to start gathering data and preparing for it now, FASB Chairman Leslie Seidman said. But if application is to be prospective only, “I think 2015 is too far away, frankly,” as an implementation date, Seidman said.

In any event, “we’re not going to implement them in a way that’s going to create significant problems,” says IASB member Stephen Cooper.

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-- Steven Marcy

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