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Financial Crisis Advisory Group Advises G-20 On Accounting Standards Convergence

by Robin Pilgrim, LawAndTax-News.com, London

07 January 2010

The Financial Crisis Advisory Group (FCAG) has reported back to the G-20 through Korean prime minister Chung Un-Chan on the progress of the International Accounting Standards Board and the US Financial Accounting Standards Board (together the 'Boards') on convergence of accounting standards.

Although conditions may have improved somewhat in various markets around the globe, the FCAG expressed the belief that it remains critically important to achieve a single set of high quality, globally converged financial reporting standards that provide consistent, unbiased, transparent and relevant information across geographical boundaries.

The FCAG praised the shared goals, values, and principles expressed in the Boards’ Joint Statement of November 5, 2009 and expressed an expectation that the standard setting process will continue in a spirit of independence and accountability.

Whilst reinforcing the concept of independence from undue commercial and political pressures, which it thought the Boards should enjoy, the FCAG considered that the recent decision by the European Commission to join the IASB Monitoring Board was useful in strengthening the accountability of the Boards.

The FCAG pointed to a number of key developments in the coming months, namely:

  • The US Securities and Exchange Commission’s response to the comments it has received regarding its proposed roadmap for the potential use of International Financial Reporting Standards (IFRS) by domestic US reporting companies;
  • The European Union’s endorsement decision regarding the completed first part of the IASB’s financial instruments project, IFRS 9, Financial Instruments: Classification and Measurement;
  • The constituent feedback on the IASB’s proposed standard from the second part of its financial instruments project, Financial Instruments: Amortized Cost and Impairment, and the issuance of its proposal on hedge accounting, the third and final part of its financial instruments project; and
  • The issuance by the FASB of its comprehensive financial instruments proposals on classification and measurement, impairment, and hedge accounting.

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