This weekend the G20 leaders are meeting in Toronto, under the banner of ‘Recovery and New Beginnings’, to discuss progress and debate further measures to improve the world’s financial system in the aftermath of the global financial and economic crisis.
Several topics of great relevance to us accountants will be discussed. One of them is the progress towards a global set of high-quality accounting standards.
When the G20 leaders met in Pittsburgh in September last year, they asked the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to ‘redouble’ their efforts to complete the project to converge their two sets of standards by June 2011, when the US Securities and Exchange Commission is expected to make a call on whether to adopt IFRS in the US. This remains a pretty ambitious goal. The two Boards have since reprioritised their work to focus on the standards of most importance.
Following the FASB’s publication of its financial instruments proposal in May, many would argue that the two Boards seem further apart now than they have been for quite some time. Stakeholders around the globe have suggested its radical fair value approach will not work. We agree, favouring the mixed measurement model adopted by the IASB, combining fair value and amortised costs.
June 2011 must remain a central milestone in the convergence process. However, rushing through the convergence project might just end in tears; it could dilute standard quality. Nobody interested in high-quality financial reporting would be happy if the standard setters pushed through new reporting rules that either don’t work very well or have unintended consequences.
I truly hope that the G20 leaders will appreciate that when they debate financial reporting at the Metro Toronto Convention Centre.