Global Accounting Standards?

Businessweek reports: "The uproar over fair value accounting practices, which some critics have blamed for the depths of the global financial crisis, threatens to sink a long-sought move by countries around the world toward a single set of international financial reporting standards (IFRS). The U.S. Financial Accounting Standards Board (FASB) has been working with London's International Accounting Standards Board (IASB) since 2002 toward what accounting professionals call convergence. The Securities & Exchange Commission (SEC) is expected to announce its road map for conversion sometime this month, which will probably include early adoption in 2010 for about 110 of the largest U.S. companies with business operations throughout the world."

"With finance ministers from the 20 wealthiest nations set to meet in Washington this weekend to discuss ways to reform the global financial system, the time seems ripe for a move to harmonize accounting standards (BusinessWeek.com, 11/8/08) across borders, making it easier for investors to compare companies operating in different geographic regions. The major stumbling blocks, critics say, include the IASB's lack of independent funding and its tendency to cave into political pressure."

"In October, the IASB bowed to pressure from the European regulators and relaxed its stance on fair value accounting by allowing companies to transfer nonderivative financial assets out of classifications that are reported at fair value into categories that use amortized cost to value assets. IASB rationalized the amendment by saying it would create a level playing field with an existing FASB standard called SFAS 115, which permits companies "in rare circumstances" to make the very same transfer. The IASB argued the current financial crisis essentially qualifies as rare circumstances because of the illiquid marketplace for financial products."

AICPA Backs FASB on Mark-to-Market Study

WebCPA reports: "The American Institute of CPAs has written to the Securities and Exchange Commission urging it to allow the Financial Accounting Standards Board to continue to set standards for mark-to-market accounting."

"The SEC is conducting a study on mark-to-market and fair value accounting mandated by the financial rescue bill, which it plans to complete by Jan. 2. In a letter to SEC deputy chief accountant James Kroeker, AICPA president and CEO Barry Melancon said that FASB should remain the organization to address the study's recommendations. The American Bankers Association has asked the SEC to override FASB guidance on fair value accounting and to create an accounting oversight board that could overrule FASB (see Bankers Call for New Accounting Oversight Board)."

"Melancon defended FASB's role in setting standards. "We believe that the FASB, with appropriate oversight by the SEC given its investor protection mandate, is best able to decide what is the most appropriate financial reporting for the capital markets," he wrote."

FASB Considers QSPE Disclosures

Market Media reports: "Companies that either transfer assets off their balance sheets or have significant variable interest in qualified special purpose entities may soon face increased disclosure requirements under U.S. GAAP."

"A proposed staff position under Financial Accounting Standards Board consideration this week requires new disclosures to be provided both by sponsors with variable interest in a variable interest entity and enterprises that hold a significant variable interest in a QSPE but were not the transferor of the asset."

"FASB decided in April to amend FAS 140 and Interpretation 46(R) to remove QSPEs from accepted accounting. The comment deadline for the amendments is Nov. 14."