IASB and FASB Playing Nice? I Don't Buy It (Plus a Few Bones for the IFRS Fanboys)
Hey, sorry, I'm going into accounting mode. It's the last CPA exam testing window of the year so I'm full-on CPA Wrangler right now, war paint and all. If you're a CPA exam candidate struggling with the exam, you can always e-mail me (to the right) and don't worry, I don't bite nor do I put you on some spam list for my company. Just want to help. But here's the shameless self-promotion if you're looking for CPA Review.
The IASB and FASB are promising to work together which means there is something afoul afoot, I don't care if it makes me appear paranoid. You would be too if you knew these people.
The International Accounting Standards Board and its U.S. counterpart, the Financial Accounting Standards Board, plan to meet on a monthly basis in order to achieve the goal of converging accounting standards by June 2011.
The chairmen of the two standards-setting boards told attendees at a joint conference of the American Institute of CPAs and the International Accounting Standards Committee Foundation in New York that they will be redoubling their efforts to reconcile the two sets of accounting standards, in some cases by rewriting them entirely over the next year-and-a-half.
IASB Chairman Sir David Tweedie and FASB Chairman Robert Herz held a three-day meeting at FASB headquarters in Norwalk, Conn., earlier this week to try to resolve thorny differences in areas such as fair value measurement, revenue recognition, asset impairment and financial statement presentation.
They reported that they made significant progress and set a series of milestones for when they expect to issue draft standards. In some cases, the IASB will hold off on making public its draft of certain standards until FASB issues its own proposals, in order to avoid confusion among accountants about which set of standards to follow. The boards intend to hold more joint face-to-face meetings, in some cases by video conference, in order to make faster progress.
Hurry up and adopt those international standards before the US gets left behind in the dust. There was a point when GAAP had some level of authority but now everyone is pissed off at us and we better adopt their standards or else we might really get cut off.
I have personally bemoaned the adoption of IFRS because it means having to adapt our CPA Review content accordingly and here I've gotten used to the same set of tired mnemonics that have worked for so many years. That's not an easy process and being ahead of the change means a lot of red eye flights to New York for my boss and Google alerts for me.
Maryland Association of CPAs' Bill Sheridan has been chasing IFRS as long as I have (remember when the SEC tried to trick me and said they didn't know when the roadmap was coming and then released it days later? Good times) and has some thoughts on CPA Success:
IFRS is hot again, and public companies aren't the only ones getting in on the act.
Equally hot of late is IFRS for Small and Medium-Size Entities, a 230-page standard from the International Accounting Standards Board designed to meet the reporting needs of smaller businesses.
Released in July 2009, IFRS for SMEs is generating a lot of buzz lately and resurrecting the debate over whether there should be a separate set of reporting standards for private companies.
He's right, IFRS is hot again and let's face it, we don't get much to get worked into a lather over here in the exciting world of accounting. This is big, and unless we can make the shift digestible for the unwashed masses scared to death of "accounting," the point might get lost along the way. It's not enough for a bunch of accountants (or inhabitants of the fringes of the accounting industry like myself) to sit around talking about it amongst themselves.
Paul Volcker has discussed this (video clip via the Journal of Accountancy), and I'm not sure to what extent it is appropriate for a Fed Chairman - either current or former - to speak on accounting standards without any sort of accounting experience but whatever, I'll try to let my Fedbashing bias stand.
FEI's Financial Reporting Blog also covered this little IASB/FASB playdate.
And then there's the AICPA's IFRS blog:
For those waiting on the status of the SEC's IFRS roadmap, last week brought big news. Speaking at two separate gatherings, SEC chief accountant James Kroeker said the roadmap would be an important priority this fall. Chairwoman Mary Schapiro, speaking to a group at Georgetown University McDonough School of Business, said it would be ideal to have a single set of high-quality global accounting standards and we should hear something later this fall about the Commission's expectations with respect to IFRS.
This week, leaders from the G20 nations will meet in Pittsburgh. In previous meetings, G20 leaders have called for significant progress toward a single set of global accounting standards. This meeting will be especially interesting, given pressure from the banking industry and European officials on the direction standard setters are taking on fair value reform. Recently, the French Finance minister urged rejection of IASB proposals on fair value reforms if the IASB does not make changes. Both James Kroeker and Mary Schapiro have expressed concerns that accounting convergence, especially a rush to convergence, can create a race to the bottom.
There are tremendous crosscurrents now. While many expressed support for movement toward a single set of global standards in comments on the SEC roadmap, Mr. Kroeker said many were “fairly downbeat” about being able to adopt IFRS in the near term. However, the time left for more convergence seems limited. The Federation of European Accountants has called on the IASB to end its convergence program with the United States. Sir David Tweedie, chair of the IASB, said continued convergence would be difficult after 2011 if the U.S. does not commit to IFRS by 2011. Earlier this year, Financial Accounting Standards Board chairman Robert Herz said that convergence of both sets of standards could take 10 to 15 years.
Until last week, these debates have been occurring with little insight of when the SEC might take action on its roadmap. Now we know. I wonder which direction the SEC will take us. What do you think will happen?
We couldn't even commit to a chief accountant for a year, what in the hell makes anyone think we can figure out this IFRS bullshit?
And don't trip, little CPA exam candidates, previous experience with the AICPA BoE informs us that if and when IFRS does hit the exam, the MCQ will be tame to say the least. It's not like you can fail FAR in the last window of 2010 and then all the sudden will have to be an IFRS expert come the first window of 2011.
See? Told you I knew what I was talking about.