The Financial Accounting Standards Board and the International Accounting Standards Board jointly published a roadmap for developing common accounting standards by 2008.
The FASB and the IASB stated that their memorandum of understanding, which elaborates on their so-called Norwalk Agreement of October 2002, does not represent a change in their convergence program. They stressed, however, that the memorandum adds context to removal of the reconciliation requirement for non-U.S. companies that use international financial reporting standards and are registered in the United States.
Reuters pointed out that the United States has agreed to accept financial reports based on IFRS rules, effective in 2009, that would end the need for reconciliation for European Union companies.
The FASB and the IASB added that the roadmap also addresses auditing and enforcement, topics that are not accounting standard-setting issues and will require the co-operation of regulators and auditors.
“This document underscores our strong commitment to continue to work together with the IASB to bring about a common set of accounting standards that will enhance the quality, comparability and consistency of global financial reporting, enabling the world’s capital markets to operate more effectively,” said FASB chairman Robert Herz, in a statement. IASB chairman Sir David Tweedie added: “The pragmatic approach [of the memorandum] enables us to provide much-needed stability for companies using IFRSs in the near term, while taking advantage of a once-in-a-lifetime opportunity to contribute to removing the need for reconciliation requirements.”
The two standard-setters also spelled out how they had allocated responsibility for a number of short-term convergence projects. The FASB will work on standards for reporting fair value options, investment properties, and research and development; the IASB will study borrowing costs, government grants, joint ventures, and segment reporting. The groups will work jointly on impairment and income tax issues.