With convergence closer, IASB chair reflects on progress.

• Author: Heffes, Ellen M.
• Position: David Tweedie of International Accounting Standards Board - Interview

As he begins his second five-year term as Chairman of the International Accounting Standards Board (IASB), Sir David Tweedie spoke about his first term and his expectations going forward. Tweedie has been at the helm of the London-based standard-setting body during the recent unprecedented period of countries around the world adopting International Financial Reporting Standards (IFRS). He spoke with Executive Editor Ellen M. Heffes following a Washington, D.C., meeting, and while waiting to board a plane to China.

When asked what pleases him about his first term as International Accounting Standards Board (IASB) Chairman, far and away, Sir David Tweedie talks about the progress made towards converging accounting standards between IASB and the U.S. Financial Accounting Standards Board (FASB). He refers to the "Norwalk Agreement," the document that set the stage for the two groups to work together "on how to get rid of the reconciliation between U.S. generally accepted accounting principles (GAAP) and international standards."

Additionally, he's pleased that the European Union (EU) decided to adopt the International Financial Reporting Standards (IFRS), which "has led to 100 countries already using the standards, plus a whole lot more starting to come in."

His trip to China--one of several during the last year, he says--came "because they are converging with us." The Norwalk agreement, he says, combined with the fact that Europe has switched, has done two things. "First, when you look at all the standard-setters who are liaison members with us [read IASB]--the United Kingdom, Germany, France--their major companies have to use our standards now, by law." It's the same, he says, for Australia and New Zealand, and Canada has recently announced that it's going to switch to international standards, as has Japan. So, basically, that leaves the international standards and the U.S. Thus, he says, "We're working to get our two countries' standards set and together. And, it's happening."

In addition, Tweedie explains that there is a list of countries that are waiting to see the outcome of the final standards for small and medium-sized enterprises (SMEs) for which an Exposure Draft (ED) was issued last summer. Following comments, the IASB will make a decision on where to do the cut-off--which companies use the regular standards and which use the smaller-company version. He says as a working example for the company size they're writing standards for, they're considering a target of about 50 employees. "We won't say it's only for companies with 50 employees, because some of the developing companies [may have] slightly bigger companies than that, but they haven't got the infrastructure to do the main standards."

Basically, Tweedie believes the process is progressing more quickly than he had expected it to. "If you asked me four years ago, when we started, 'where would you be in four year's time?' I wouldn't have thought we'd have gotten so far. I thought we'd face more of a slog!"

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