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Remarks by FASB Chairman Leslie Seidman to the NASBA

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25 Oct 2011

On 24 October 2011, FASB Chairman Leslie Seidman gave a speech to the National Association of State Boards of Accountancy (NASBA) on her personal views regarding three subjects.

The subjects were 1) convergence status between the IASB and FASB; 2) IFRS incorporation and 'condorsement'; and 3) the current stance on private companies standard-setting.

Regarding the convergence project, Chairman Seidman commented on the progress made by the FASB and IASB on converged standards on business combinations, stock compensation, nonmonetary exchanges, fair value measurements, and comprehensive income. She noted that the remaining priority issues (revenue recognition, leasing, and financial instruments) will be resolved under the Memorandum of Understanding. She mentions that both the exposure drafts on revenue recognition and leases will be 're-exposed' for quality control purposes which consequentially will add to the timeline. On financial instruments, she says, "impairment is the most important issue that we should be working on in response to the financial crisis . . . we are developing an approach based on expected losses, rather than probable, incurred losses, which will reduce the barriers to timely loss recognition."

In addition, Chairman Seidman addresses the issue of IFRS incorporation in the United States. She comments that the FASB has "supported the goal of developing high-quality, comparable, global accounting standards." She outlines three key points to recognise as standard setters work on comparable global standards. The points are: 1) the United States has a set of high-quality accounting standards; 2) "U.S. investors, preparers, auditors, users of financial statements, and other stakeholders want to have a strong, clear and effective voice in the standard setting process"; 3) a shift to an international standard must maintain or improve upon the U.S. accounting standard.

Seidman also commented on the SEC staff's paper on "condorsement" noting four positive aspects. She believes "condorsement" shows: 1) U.S. support for the development of global accounting standards; 2) a practical approach of retaining the label "U.S. GAAP"; 3) some level of U.S. involvement when creating a new standard; and 4) a gradual approach to dealing with the remaining differences between U.S. GAAP and IFRS.

In conclusion, Seidman commented on progress made to the issue of standard-setting for private companies. She believes the proposed Private Company plan, which creates a new Private Company Council whose role will be to "identify, propose, deliberate, and formally vote on specific exceptions or modifications to U.S. GAAP for private companies," will complement the FASB efforts in addressing private companies' issues. The creation of a "separate standard-setting board for private companies under the auspices of the FAF was one of the recommendations made earlier this year by the Blue-Ribbon Panel on Standard Setting for Private Companies."

Click for the speech transcript (PDF 352k, link to FASB website).

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