The coming convergence: global accounting standards: International Accounting Standards convergence is quietly moving forward and practitioners should begin to prepare for the inevitable.

• Position: IFRS - Interview

The accounting profession has several sets of international standards. Perhaps best known are the International Accounting Standards Board's international financial reporting standards (IFRS), which have been embraced at some level by most major economies outside of the United States. Additionally, the International Federation of Accountants (IFAC) has boards that set international standards for auditing, ethics, education and public sector accounting.

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IFAC is an association of professional accountancy bodies from nearly 120 countries. U.S. members include the AICPA, the National Association of State Boards of Accountancy and the Institute of Management Accountants.

IFAC's mission is to develop the global accountancy profession, which includes funding and overseeing the development of international standards for auditing, ethics, education of professional accountants and public sector financial reporting, as well as providing support for small and medium practices and professional accountants in business. The member bodies of IFAC contribute funds for standard-setting, as well as immense levels of volunteer technical talent that helps create the standard setting boards.

California CPA recently interviewed Robert Bunting, a partner at Moss Adams LLP in Seattle and deputy president of IFAC, for an insider's glimpse into the international standard-setting process and his reflections on the impact for the profession.

Q: How did international standards come about? Who set those standards then and who is working on those standards now?

A: The international standard-setting process was an effort by the developed nations to create standards that could be used by developing and smaller nations not able to develop their own. As the business world became more global, investor groups, regulators, large companies and auditing firms began to realize the importance of common standards in all areas of the financial reporting chain. The formation of the European Union accelerated this realization as these major economies began to focus on the need for one set of standards and a common approach to regulating listed companies and auditors across Europe. European listed companies are now in their second year of implementing common financial reporting standards (IFRS), and the EU is in the process of settling on a common set of standards for auditing and ethics.

In the United States, the SEC has set a timetable for allowing foreign companies traded on U.S. exchanges to report using IFRS by 2009. The Norwalk Agreement, which exists between the FASB and the International Accounting Standards Board, sets out a framework to bring U.S. and international reporting standards closer together. Additionally, SEC Chairman Chris Cox has called for convergence of U.S. and international standards in public statements with increasing frequency in recent months.

The Auditing Standards Board in the United States, which sets auditing standards for private companies, has been using International Standards on Auditing (ISA) as the basis for its standards for several years. Even the PCAOB has allocated...