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FASB and IASB Prepare First-Quarter Convergence Update

Tammy Whitehouse | February 26, 2010

Accounting rulemakers are putting the finishing touches on a report that will update capital markets on their efforts to converge U.S. and international accounting standards.

The Financial Accounting Standards Board and the International Accounting Standards Board are expected to publish the first of what will become a series of quarterly reports to document their progress in making U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards more consistent with one another. The two boards announced in November they would provide quarterly updates on their convergence progress given the implications on some important policy fronts.

For one, the Securities and Exchange Commission has hinged its plan for moving U.S. capital markets to IFRS on the ability of the two boards to eliminate substantial differences between GAAP and IFRS. The SEC published a work plan this week updating where it stands on adopting IFRS in the United States, and the plan focuses on the convergence movement as a key criteria for when and how the Commission ultimately will transition U.S. registrants over to IFRS.

Even further, the Group of Twenty nations are watching the convergence effort, hoping it will eliminate differences in accounting standards that it believes may have played a role in the economic crisis.

A spokesman for IASB said the two boards are expected to issue their first joint quarterly progress report very soon. A spokesman for FASB said the various project updates posted by the two boards demonstrates “quite a bit of progress” in recent months.

“We remain committed to working with IASB,” said spokesman Chris Klimek. “(We) appreciate the SEC’s leadership and additional guidance on this important matter, and like everyone, we will be studying the work plan carefully in the days ahead and discussing what it means for us.”