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Convergence Topics

Date recorded:

The Board discussed certain areas of difference among major national accounting standards and IAS where there are opportunities for convergence. The Board noted that IASB is making an effort, in all of its projects, to converge IFRS with national standards, particularly with US GAAP. For the project to be successful, the national standard setters must similarly work to amend their standards. IASB will communicate potential areas where national standard setters could act to achieve convergence when the IASB meets with the national standard setters in September (at FASB) and October (general meeting with liaison standard setters).

The following standards were considered to identify whether a discrete convergence project might produce high quality solutions in a relatively short time:

STANDARD

COMMENTS

IAS 8, Accounting Policies

Main difference noted is the existence of the true and fair override within the standard. This issue is being addressed as part of the Improvements Project.

IAS 16, Property Plant and Equipment

The main differences are in the area of options to revalue. The IASB's revaluation advisory group is currently examining this issue and are expected to report in October. The components approach to depreciation was also discussed as a potential area for convergence.

IAS 20, Accounting for Government Grants and Disclosure of Government Assistance

It was agreed that this area would be considered as part of the convergence project.

IAS 21, The Effects of Changes in Foreign Exchange Rates

The main differences noted were the existence of recycling in the IAS and differences in the treatment of hyperinflationary economies.

IAS 31, Financial Reporting of Interests in Joint Ventures

IASB is considering removing the option for proportional consolidation. This will be discussed with the national standard setters in October.

IAS 33, Earnings Per Share

As part if the Improvements Project, IAS 33 will converge with US GAAP in most significant areas.

IAS 36, Impairment of Assets

The analysis in this area will be forwarded to the Canadian project on impairment.

IAS 37, Provisions, Contingent Liabilities and Contingent Assets

The Board noted that the definition of and measurement principles for liabilities need to be resolved before a satisfactory conclusion can be reached regarding provisions.

IAS 38, Intangible Assets

This is currently being addressed as part of the Business Combinations project. The main differences are on internally generated intangibles and the treatment of development costs. This will be discussed at the meetings with national standard setters in September and October.