The Financial Accounting Standards Board expects to send its financial instruments proposal out for a second round of public comment in the second half of 2012 and to wrap up all of its major convergence projects – on financial instruments, leases, revenue recognition, and insurance – in mid-2013.
FASB Chairman Leslie Seidman, and her counterpart at the International Accounting Standards Board, Hans Hoogervorst, included those projections in a report to the Financial Stability Board to update efforts to converge U.S. and international accounting rules. FSB is an international body charged with coordinating various national efforts to promote financial stability.
Seidman and Hoogervorst said they have not made a firm decision to re-expose the still-developing standards that focuses on how to classify and measure financial instruments, as well as how and when to impair them, or write them down for loss in value. “Taking into consideration the significance of the changes that these projects propose, we expect that they will also be re-exposed,” the boards told the FSB.
The boards said they continue to work “expeditiously” to finalize their four key projects on financial instruments, leasing, revenue recognition, and insurance, but they also are taking care to set a pace that assures thorough consultation to assure the standards are workable in practice. “Delays in completing these much-needed improvements to financial reporting are unfortunate, but necessary to ensure that any changes are operational and will bring about an improvement to financial reporting in these important areas,” the chairmen wrote.
The two boards have worked closely on their standards for leasing, revenue recognition and insurance contracts, but pursued separate approaches in financial instruments until recently. The boards have started to pursue more common approaches with respect to how to classify and measure financial instruments and how they should be assessed for a markdown, giving the chairmen hope that they can ultimately published more converged standards.
The boards have already published a second draft of the proposal for revenue recognition and have promised a second draft of the proposed standard for lease accounting. FASB also expects to issue an exposure draft of a standard for insurance contracts in the second half of 2012.