G20 Ministers of Finance and Central Bank Governors 'concerned' about convergence

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06 Nov 2012

A communiqué has been released outlining the outcomes of a meeting of the Ministers of Finance and Central Bank Governors of the Group of 20 (G20), which was held in Mexico City on 4-5 November 2012. The communiqué notes 'concern about the slow progress achieved toward a single set of high quality accounting standards'.

The Communiqué goes on to say:

We encourage the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) to complete work promptly, and report to our next meeting.

The meeting also received a report from the Financial Stability Board (FSB), entitled Progress on Financial Regulatory Reforms, which includes a summary on accounting convergence.  The report discusses the progress made by the IASB and FASB, noting the recent moves towards closer alignment in the area of classification and measurement of financial instruments.  However, the report also laments the lack of convergence on financial instrument impairment.

The report further explains the FSB's concerns as follows:

Sound expected loss provisioning for financial institutions is critically important to financial stability.  Final IASB and FASB standards should result in improved provisioning practices that incorporate a broader range of available credit information than current practices, so as to recognise credit losses in loan portfolios at an earlier stage.  The FSB is concerned that the two boards have not developed a common model in this important area, and encourages them to renew their efforts to converge.

The FSB report also reiterates the importance of the overall IASB-FASB convergence process and requests a report from the boards by the end of June 2013.

Both the communiqué and FSB report cover many other topics related to improving the resilience of the financial system in response to the global financial crisis.  The communiqué also includes a commitment to "voluntarily self-report again in 2013 on our efforts to incorporate green growth and sustainable development policies into structural reform agendas, taking into account the outcome of the UN Conference on Sustainable Development (Rio+20)".

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