It's June 2011: where are the converged accounting standards?

• Author: Cheney, Glenn A.
• Position: FINANCIAL REPORTING

In 2006, the International Accounting Standards Board and the Financial Accounting Standards Board issued a Memo of Understanding (MoU) in which the two boards established priorities in their pursuit of converging United States generally accepted accounting principles with International Financial Reporting Principles (IFRS). In 2008, the boards projected a June 2011 deadline for the issuance of several high-priority standards. By press time, several key standards still remain to be completed.

The boards are close to final conclusions, but not close enough, so on April 21 they announced they are extending their deadline until later this year.

Could even that deadline be too soon? The deluge of comments on Exposure Drafts issued last year for the major projects resulted in extensive redeliberations. With the consequent changes substantive, businesses around the world are eager for a second peak at proposed standards that could have a significant impact on accountancy and the global financial markets.

The ED on revenue recognition elicited nearly 1,000 comment letters. The boards responded with several changes, and by summer's end they will decide whether the changes warrant reexposure. Even if they conclude that formal reexposure is unnecessary, they plan to roll out the proposal and solicit constituents' comments.

The plan is pretty much the same for the project on accounting for leasing. Once redeliberations on both sides of the Atlantic are complete, the boards will consider how best to test the waters of public opinion.

FASB and IASB are also grappling with a broad, multipart project on accounting for financial instruments. They have wandered in different directions, so the shape of any converged proposal is still unclear. Earlier this year they issued joint drafts on balance sheet offsetting of derivatives and other financial assets and liabilities, and in all due optimism they hope to complete redeliberations in the third quarter of 2011. By then they also plan to reconcile differences in existing standards on classification and...