Financial Reporting: Focus on the IASB.

• Position: Conferences - International Accounting Standards Board

FEI's annual Current Financial Reporting Issues conference kicked off Monday, Nov. 12, at New York's Waldorf-Astoria Hotel with a keynote address by former Federal Reserve Board Chairman Paul Volcker. Now head of the International Accounting Standards Committee, he confessed to being something of a neophyte in the accounting world, and said he's "impressed by the difficulty of the issues" involved in trying to devise a single set of global accounting standards. "The world of auditing and accounting appears to be in crisis," driven in part by issues such as intangibles, the complexity of derivatives and trading and financial engineering, he added.

Volcker conceded that it will be difficult to achieve consensus on the 14-member International Accounting Standards Board (IASB), appointed by the IASC. Countries are at different stages of development, and it's unclear where the final authority for the standards would rest, especially if political entities get involved. He added that disagreement could arise over two competing philosophies -- the U.S. approach of setting standards in detail and the "European idea" of setting out clear standards but leaving detail to practice and emerging issues.

Volcker took a relatively hard line on the controversial issue of options accounting, saying it's a difficult subject that won't be settled quickly. While there may be different expectations about the urgency of the issue, he said, it can't dominate the board's agenda.

A panel session featured Thomas Jones, the IASB vice chairman; Edmund Jenkins, chairman of the Financial Accounting Standards Board (FASB); and John Morrissey, deputy chief accountant at the U.S. Securities and Exchange Commission.

Jones, the former Citicorp finance chief, said that for international standards to work, there has to be a "three-legged stool" with standards, audit and enforcement. He supports the European model of creating less-detailed standards, then "going after those who deviate" from them.

Jones called options accounting a volatile issue whose outcome isn't clear. Europeans are already writing standards on options, he said, and urged the U.S. not to create "a frenzy" or become inflexible. "This is a board that won't take to being bullied," he said of the IASB, and cautioned advocates of the U.S. system not to withdraw support of the IASB over this issue.

Jenkins emphasized the FASB's "unequivocal support" for the idea of high-quality global standards, noting that the...