The issues [causing the turmoil] are known: weak internal valuation models, opaque securitization process, business models that were built upon disproportionate maturity mismatches between assets and liabilities, weak internal controls and poor disclosure standards, to name but a few.

Improving valuation standards, in particular for illiquid assets. This work is done at international level. It has recently intensified. We are happy to hear that the International Accounting Standards Board (IASB) will present a discussion paper including considerations on fair value measurement this month. In May, a task force of the International Organisation of Securities Commissions (IOSCO) will also present its findings. This is good news. We will continue to closely monitor progress. There is a growing debate on whether fair value and mark to market measurements may have aggravated the crisis by bringing pro-cyclicality in financial statements. I want to make it clear that I believe that there are some real accounting issues and anomalies to examine, including the interface with the Capital Requirements Directive, such as the consolidation of special purpose entities or the measurement and information disclosed on risk exposures. Clearly, these and other issues – such as the impact of mark to market valuation when markets generally become illiquid and irrational – must be thoroughly analysed.

• The number of accounting faculty declined 13.3 percent over the period 1988-2004.
• However, undergraduate student enrollment in accounting increased 12.3 percent over the same period.
• Most of the faculty decline occurred at four-year, non-doctoral-granting institutions (decline of 31 percent since 1993). The number of full-time accounting faculty at research/doctoral universities and at community colleges changed little between 1993 and 2004. No change, also, in the total number of accounting faculty holding PhDs.
• The number of accounting faculty over the age of 55 increased while the number of accounting faculty under the age of 40 declined by half during the 1993-2004 period. The study estimates that the number of retirements is likely to exceed the number of qualified replacements in the immediate future.
• One result has been a salary inversion observed in the 2004 data: faculty under age 41 averaged higher pay than faculty over age 41.
• Workload for accounting faculty has increased markedly, especially at research and doctoral universities, where the bulk of enrollment increases has also occurred.

Among the short-term recommendations:

• President's Working Group on Financial Markets (PWG). This existing inter-agency coordinating body should be expanded, and its role as policy-maker should be enhanced.
• Mortgage origination. Create a six-member federal Mortgage Origination Commission (MOC) that would establish uniform minimum licensing qualification standards for state mortgage market participants. The MOC would also evaluate, rate, and report on the adequacy of each state's system for licensing and regulation of participants in the mortgage origination process.
• Liquidity provisioning by the Federal Reserve. First, the current temporary liquidity provisioning process during those rare circumstances when market stability is threatened should be enhanced to ensure that: the process is calibrated and transparent; appropriate conditions are attached to lending; and information flows to the Federal Reserve through on-site examination or other means as determined by the Federal Reserve are adequate. Key to this information flow is a focus on liquidity and funding issues.

• Federal thrift institutions. Federally chartered savings and mortgage institutions should become national banks. The Office of Thrift Supervision would be closed, and its operations assumed by the Office of the Comptroller of the Currency (the federal bank regulator). This transition would take place in two years.
• Federal banking supervision. There should be direct federal supervision of state-chartered banks. A number of proposals are set out in this regard.
• Payment and settlement systems oversight. There should be direct federal oversight of all systems used to transfer funds and financial instruments between financial institutions and between financial institutions and their customers.
• Insurance. A federal system for chartering, licensing, regulating, and supervising insurers should be created. Insurers, reinsurers, agents, and broers would elect to be regulated under the federal system or to continue under the current state-based regulation. A new Office of Insurance Oversight would be established within the Treasury Department to take the lead role in federal insurance regulation.
• Futures and securities. The Commodity Futures Trading Commission (CFTC, which regulates futures and options) and the Securities and Exchange Commission (SEC, which regulates securities, mutual funds, stock markets, and broker/dealers) should be merged to provide unified oversight and regulation of the futures and securities industries.

One of the trickiest aspects of UK IFRS conversion was that many international standards were being improved from 2001 to 2005. We didn't have, until fairly late in the process, a settled set of standards, a situation which was compounded by the time it took for Europe to adopt the improved IFRS. Converting was thus trying to hit a moving target. The effort of the IASB is no longer a 'scatter gun' over many standards, but more of a 'rifle' approach in certain key areas like leasing and debt/equity. Hopefully, it will be easier for future IFRS converters to get a fix on the target....

We have to get away from thinking that using IFRS means there must be only one way of doing everything and that any sign of difference means the system is a failure. US preparers and auditors are accustomed to having thousands of pages of accounting guidance, much of which is produced on an industry-by-industry basis. It will be for the UK and others to stop any excessive rule creep. But reasonable variations should simply be accepted.

The topics covered in the 27 March 2008 Stay Tuned Online IFRS and UK GAAP Update were:

• the new version of IFRS 3 Business Combinations and changes to IAS 27 Consolidated and Separate Financial Statements
• amendments to IFRS 2 Share-based Payment
• amendments to IAS 32 in respect of puttable financial instruments and obligations arising on liquidation
• Deloitte's Half A Story survey of interim financial reporting under the Disclosure and Transparency Rules and IAS 34.