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."