Annual FASAC survey addresses convergence

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09 Aug 2006

The US Financial Accounting Standards Advisory Council (FASAC) is in the midst of its (PDF 160k) on issues confronting the US Financial Accounting Standards Board.

The 2006 survey focuses on four areas – FASB priorities, future issues, educational efforts, and international convergence.

With respect to convergence, the survey asks three questions:

  • In February of this year, the FASB and the IASB published a memorandum of understanding that affirms the Boards' shared objective of developing high-quality, common accounting standards for use in the world's capital markets. Both the FASB and the IASB believe that a common set of high-quality accounting standards will enhance the consistency, comparability, and efficiency of financial statements, enabling global markets to operate more effectively. Do you support the notion of international convergence of accounting standards? Why or why not?
  • Assume that the FASB and the IASB achieve the goal of converging standards at some point in the future. What would be the role of the FASB in a world of converged accounting standards?
  • Consider the following: The FASB identifies an area in financial reporting that needs significant improvement. The FASB estimates that it could issue a nonconverged final standard in four years that would result in a significant improvement to US financial reporting. An internationally converged standard would take seven years to complete. How heavily should the Board weigh timely improvement to US standards versus international convergence in determining its own standard-setting priorities? Is it ever appropriate to forgo or delay convergence if a pressing need exists domestically?

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