New Pressure Is On To Change Global Accounting Standards To Address Financial Crisis

by Glen Shapiro, LawAndTax-News.com, New York

30 June 2009

A new coalition of trade associations, representing all sectors of the economy and areas of the financial services arena has been formed to 'engage the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) on a series of projects to reform accounting standards associated with the financial crisis'. At the same time an advisory panel to the Financial Accounting Foundation, which funds the US Financial Accounting Standards Board, bemoaned the political pressure being applied in the US and stated that 'it appears to be even more dire outside the US' as the International Accounting Standards Board also faced threats from regulators and politicians.

The new coalition, called the Financial Instruments Reporting and Convergence Alliance (FIRCA), states that its objective is to support the adoption of joint IASB-FASB international high quality robust accounting standards. The standards should be 'decision-useful, reliable, and relevant'. Additionally, it wants to prevent 'potential unintended consequences of new accounting standards' and ensure that FASB and IASB 'projects are conducted jointly to ensure a comprehensive response to financial reporting policies'.

The panel, called the Investors Technical Advisory Committee (ITAC), in an open letter to the Chairman of the FAF, stated: 'Special interests that have been instrumental in causing the present crisis, the effects of which are borne by hundreds of millions around the globe, have targeted one of the critical components of global capital markets, financial reporting and the transparency it brings, and seek to subvert it for their own purposes. This woeful situation must end.' ITAC was set up by the FASB to 'give investor perspectives on the implementation of new standards'. It states that its views are not necessarily those of the FAF or the FASB.

FIRCA represents the Group of North American Insurance Enterprises (GNAIE), the American Council of Life Insurers, Commercial Mortgage Securities Association, Council of Federal Home Loan Banks, Mortgage Bankers Association, Property Casualty Insurance Association of America, The Financial Services Roundtable, The Real Estate Roundtable and The US Chamber of Commerce.

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