International Financial Accounting Standards: Now The Hard Work Begins.

• Author: Heffes, Ellen M.
• Position: Brief Article

The International Accounting Standards Board (IASB) was formed with the dedicated support of a worldwide constituency -- all of whom have allocated resources, people, time and money -- to work towards producing a single set of universally accepted, high quality accounting standards. Now, with the infrastructure and organizational details complete, the group is getting down to work -- an understandably monumental task.

"The big question is what to start with," says Norman Strauss, Ernst & Young's national director of accounting standards and member of the Standards Advisory Council (SAC), an advisory group to the IASB. "Many international standards have several alternatives that are acceptable. We could, as a 'quick fix,' eliminate some and show some immediate signs of progress. Then we could begin to tackle bigger issues. Setting the agenda is important," says Strauss in an interview.

Would it be leasing, stock options, pooling of interests? Thus, when the IASB met in London in late July -- following extensive consultation with the SAC -- to set agenda items, a major decision was: would it tackle something very controversial at the get-go, or would it start with something safer and easier to accomplish, so that some progress would be quickly visible?

The group has opted for a little of both.

"We're on our way," said IASB Chairman Sir David Tweedie, as he announced the group's initial agenda of nine technical projects: "Four projects provide leadership or convergence; two others are designed to make existing standards easier to apply and three more aim to improve the basic standards we inherited from our predecessor Organization."

Projects intended to provide leadership and promote convergence include: Accounting for Insurance Contracts, Business Combinations, Performance Reporting and Accounting for Share-Based Payments (stock options).

Projects intended to provide for easier application of International Financial Reporting Standards (IFRS) include: Guidance on First-Time Application of IFRS and Activities of Financial Institutions: Disclosure and Presentation.

Projects intended to improve existing IFRS include: Preface to IFRS, Improvements to Existing IFRS and Amendments to IAS 39, Financial Instruments: Recognition and Measurement.

Also, 16 other issues are being worked on by one or more national standard-setting partners.

Although there's much talk of convergence and the...