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Joint FASB and IASB Statement of Convergence Update

Posted 8:20 PM by

In November 2009, the Financial Accounting Standards Board and the International Accounting Standards Board reaffirmed their commitment to improving U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) through convergence. The convergence could have a significant impact on the manufacturing and distribution industries.

The boards are in the process of developing a modified strategy to take into account the concerns expressed by stakeholders with regard to the large number of exposure drafts planned for publication in the second quarter of this year and their ability to provide high-quality input. The modified strategy would: (a) prioritize the major projects to permit a sharper focus on issues and projects that the boards believe will bring about significant improvement and convergence between U.S. GAAP and IFRS; (b) stagger the publication of exposure drafts and related consultations, such as public round table meetings, to enable the broad-based and effective stakeholder participation in due process that is essential to the quality of their standards; (c) limit to four the number of significant or complex exposure drafts issued in any one quarter; and (d) issue a separate consultation document seeking stakeholder input about effective dates and transition methods.

The modified strategy retains the target completion date of June 2011 for many of the projects, including those projects where a converged solution is deemed to be urgent. The target completion dates for some projects have extended into the second half of 2011.

In connection with the announcement by the boards, Securities and Exchange Commission (SEC) Chairman Mary L. Schapiro released a statement indicating that she does not expect the boards’ modified plan to change the SEC’s timing for a determination in 2011 about whether to incorporate IFRS into the financial reporting system for U.S. issuers, which was provided for in the Commission Statement in Support of Convergence and Global Accounting Standards.

The Joint FASB and IASB statement on convergence is available at www.fasb.org.

About the Author
Jason Patch is a partner in Katz, Sapper & Miller’s Audit and Assurance Services Group and leads the firm’s Manufacturing and Distribution Services Group. Jason works with clients to ensure accurate financial reporting, keeping an eye on their bottom line, helping them avoid risk, and maximizing efficiencies. Connect with him on LinkedIn.

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