G20 Finance Ministers and Central Bank Governors remain concerned about convergence

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17 Feb, 2013

The Communiqué from meeting of the G20 Finance Ministers and Central Bank Governors held in Moscow on 15-16 February 2013 expresses 'concern' about the delay in the convergence of accounting standards, and also calls for improvements in public sector reporting.

The Communiqué states the following:

We note with concern the delays in the convergence of accounting standards to date and ask the IASB and the FASB to finalize by the end of 2013 their work on key outstanding projects for achieving a single set of high-quality standards.

The meeting received a report from the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) on the status and timeline of their remaining projects on converging their standards.  The report responds to a request from an earlier November 2012 meeting of the G20 Finance Ministers and Central Bank Governors where concern was also noted on the slow progress of convergence, with a particular focus on financial instruments impairment.

The IASB-FASB report was submitted to the meeting by the Financial Stability Board (FSB). The FSB's accompanying summary and analysis of the report, communicated in an FSB Chairman's letter entitled Progress of Financial Regulatory Reforms, is as follows:

The two Boards expect to make progress on the two key outstanding issues of impairment of loans, where they expect to complete their deliberations in 2013, and insurance contracts, where both Boards will be holding public consultations this year. Of these two outstanding issues, the need for convergence on a new forward-looking expected loss approach to provisioning is of most immediate concern for end-users and from a financial stability perspective. We note with concern the delays in convergence to date. We therefore recommend that the G20 ask the IASB and FASB to prepare by end-2013 a roadmap for converging to a common approach for impairment and for achieving the G20 objective of a single set of high quality accounting standards.

The Communiqué also deals with many other topics, many related to the response to the global financial crisis.  To this end, the Communiqué acknowledges the important role of public sector reporting in financial stability:

In pursuit of our goal of strengthening the public sector balance sheet, work is needed to better assess risks to public debt sustainability. This includes, inter alia, taking into account country-specific circumstances, looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt.

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