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| Thursday, 1 January 2004 |
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US moves to converge with IFRSs The International Accounting Standards Board (IASB) welcomed the release of four Exposure Drafts by the US national standard-setter, the Financial Accounting Standards Board (FASB). The proposals are part of a joint effort to eliminate differences between US generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRSs). The four FASB Exposure Drafts released today address the accounting for changes in accounting policies, earnings per share, exchanges of non-monetary assets, and inventory measurement. A fifth US Exposure Draft, on the classification of liabilities as current or non-current, is expected in January 2004. The FASB Exposure Drafts are part of a series of proposals likely to result from the short-term convergence project that was initiated after the joint meeting of the IASB and the FASB in September 2002. At that meeting, and in the subsequent Norwalk Agreement of October 2002 the FASB and the IASB "agree(d) to quickly commence deliberating differences identified for resolution in the short-term project with the objective of achieving compatibility by identifying common, high-quality solutions". Through the convergence project, the two boards are able to build on existing practice to improve their respective accounting standards, while reducing differences that serve to confuse the investing public and increase barriers to the free flow of capital. The IASB has already published, in its Exposure Draft ED 4 Disposal of Non-current Assets and Presentation of Discontinued Operations, proposals to bring international practice (now set up in IAS 35 Discontinuing Operations) into line with US GAAP. The IASB and the FASB are also working on proposals to reduce differences in the accounting for research and development, income taxes, and interim reporting. The two boards are cooperating to reach similar conclusions on issues related to business combinations, share-based payment and revenue recognition. In welcoming the FASB's proposals, Sir David Tweedie, Chairman of the IASB, commented "Both the IASB and the FASB see the convergence project as an opportunity to build upon existing best practice, contained in IFRSs and in US GAAP and other national standards. In pursuing the convergence goal, the two boards will improve the quality of their existing standards, while reducing differences that cause unnecessary confusion and barriers to cross-border investment and economic growth. In the first year of the project, we have made good progress towards our shared goal of achieving a single set of high quality global accounting standards. The FASB's proposals are a further step in that direction, and clearly demonstrate the US board's commitment to our shared objective". |
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