FASB converges treatment of accounting changes
02 Jun 2005
The US Financial Accounting Standards Board has issued Statement No.
154 Accounting Changes and Error Corrections, which requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. The previous FASB standard had required that most voluntary changes in accounting principle be recognised by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. Excerpt from (PDF 20k):
Statement 154 is the result of a broader effort by the FASB to improve the comparability of cross-border financial reporting by working with the International Accounting Standards Board toward development of a single set of high-quality accounting standards. Michael Crooch, FASB Board member and Board collaborator on the project, said, "This is one example where the Board concluded that the IASB requirements result in better financial reporting. We were able to make a meaningful improvement in U.S. GAAP while converging with the IASB." |