The Financial Accounting Standards Board and the International Accounting Standards Board, makers of U.S. and international accounting rules, on Thursday released an updated memorandum of understanding that strives for all major joint projects to be completed by 2011.
The update of the 2006 document makes a clear push toward a single set of global accounting standards. The memorandum highlights 11 different areas of convergence. In seven cases both FASB and IASB have reached a common standard or are on track to develop one. In the other four instances the boards remain at different stages of figuring out the best approach.
“This reflects our continued commitment to work together to develop a single set of high-quality international accounting standards,” said Robert Herz, FASB chairman.
The areas where the boards will work together to improve or create new standards include financial statement presentation, leasing, distinctions between liabilities and equity, and revenue recognition. Last month the Securities and Exchange Commission unveiled a plan that under which U.S. firms could be required to file their financial statements using IFRS instead of GAAP by 2014.
Herz said the boards will decide later this year whether to modify their short-term convergence projects, which cover rules on joint ventures, income taxes, government grants, and impairments.
The memorandum is the latest sign that the convergence of accounting standards is picking up pace. It comes a day after a member of the Public Company Accounting Oversight Board, Charles Niemeier, said publicly that moving away from U.S. GAAP will undermine the U.S. regulatory system, and thereby “put in jeopardy the thing that gives the U.S. a competitive advantage.”
Niemeier is not the only one attempting to debunk the “mythology” of IFRS. On Tuesday the Association of Investment Companies, a British investor protection group, said IASB needed better governance and should be more considerate of investors.
“Delivering a global accounting system is desirable but not without its problems,” said Daniel Godfrey, director general of the AIC. “One-size-fits-all international accounting standards have contributed to longer financial statements and more complex disclosures.”