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US Federal Reserve Board Governor supports IFRSs

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14 May 2004

In her Testimony (PDF 145k) yesterday before the US House of Representatives Financial Services Committee, Federal Reserve Board Governor Susan Schmidt Bies expressed strong support for the use of International Financial Reporting Standards by global banking organisations.

Among other things, she praised the IASB's standards on financial instruments:

The IASB is now independent of the international accounting profession and independently funded. It has adopted many of the structural elements of the FASB in the United States, which are intended to promote an independent, objective standards-setting environment. Many senior American accounting experts serve on the IASB and its staff. IASB GAAP has many similarities with U.S. GAAP and the IASB issued extensive enhancements to its standards last year and this year, with additional improvements also issued as a proposal this year. For example, in recent months the IASB issued major revisions to its standards for financial instruments, which are similar to U.S. GAAP and cover many areas of banking activities.

One aspect of these revisions by the IASB significantly improved the guidance on loan loss allowances in ways that could lead to better bank reserving practices around the world.

The Federal Reserve has long supported sound accounting policies and meaningful public disclosure by banking and financial organizations with the objective of improving market discipline and fostering stable financial markets...

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