Leslie Seidman, new Chair of FASB, said that the Board is very committed to achieving a consistent set of global accounting standards with the IASB. An intensive effort is ongoing to work with the IASB to arrive at a common solution. An example of this approach is the impairment project. But she would not be drawn into predicting when a date certain will be set by the SEC for the full adoption of IFRS in the US. The Chair noted that the SEC has said they will make a decision later this year on how to proceed. The Chair’s remarks came during a FASB webcast on the outlook for 2011.
The new Chair strongly supports the SEC staff Financial Reporting Roundtables as a good opportunity to diagnose the source of a financial reporting problem and designate the correct organization to deal with it. Some financial reporting issues may not involve standard-setting, she said, but may, for example, involve auditor oversight.
Chairman Seidman also noted that the expansion of FASB from five to seven members will provide for more diverse and informed views, including investor and private company voices, at the standard setting table and can only help the Board put out a better proposal. The expanded Board will also be able to reach out more to constituents.
The top joint projects with the IASB are accounting for financial instruments, revenue recognition, and leasing. The projects aim at resolving inconsistencies between GAAP and IFRS. As the projects continue, sometimes GAAP moves towards IFRS, she said, and sometimes IFRS moves towards GAAP.
With regard to accounting for financial instruments, US GAAP and IFRS are different. It is important to attain a workable converged standard that users of financial instruments will have confidence in. She noted that commenters believe that marketable securities should be carried at fair value under the converged standard. The Chair allowed that some other assets could be more usefully classified under cost accounting.
A single global accounting standard for revenue recognition is another high joint FASB-IASB project, along with adequate implementation guidance. Both Boards are committed to a strong revenue recognition standard, said the Chair, since there is a consensus among users of financial statements that revenue recognition is the most important element in the financial statement.
After the high priority projects are completed by mid-year, FASB will turn to deferred projects, such as financial statement presentation. Also, at some point, Chairman Seidman wants FASB staff to identify the remaining differences in US GAAP and IFRS that are not important to investors and weigh whether these differences are worth trying to converge.