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FASB chair remarks on comparability in global financial reporting

  • Russell Golden Image

16 Oct 2013

FASB Chairman Russell Golden gave a speech in Tokyo to members of Keidanren (Japanese business organisation) and FEI Japan concerning efforts taken in Japan and the United States to achieve greater comparability in global financial reporting.

First, Mr Golden commented on actions in Japan. He mentioned two papers, Keidanren’s 10 June position paper, “Basic Stances on Japan’s Future Corporate Accounting System,” and the Business Accounting Council’s 19 June paper, “The Present Policy on the Application of International Financial Reporting Standards (IFRS).” Both papers provid helpful analyses on the global effort to converge accounting standards. From his analysis of the papers, Mr Golden provided four important principles, which are:

    1. Working towards a common set of global accounting standards.
    2. Full participation with the IASB during the standard-setting process.
    3. Maintaining and improving national accounting standards.
    4. National business cultures require jurisdictions to maintain differences in national accounting standards.

He believes that it is important for Japan and the US to take a leadership role in advancing these principles around the world.

Next, Mr Golden provided a brief history of the FASB’s role towards convergence. He highlighted the 2002 Norwalk Agreement, which brought the IASB and FASB together to converge US GAAP and IFRS. He also stated the FASB’s top priority for the remainder of this year and next will be to complete the major convergence projects. The FASB expects to issue final standards on revenue recognition in early 2014, classification and measurement; and impairment in 2014, and leases in late 2014. The standard on insurance contracts is expected sometime after the leasing standard has been issued.

Mr Golden mentioned that while the FASB has been concentrating on the convergence effort, the SEC is still evaluating whether to endorse the use of IFRS in the United States. In July 2012, the SEC issued a staff report describing the positive and negative aspects of IFRS, but has not provided a recommendation on how the US should proceed.

Mr Golden then provided several steps the FASB is taking to improve financial reporting in the US while also seeking to improve and converge financial reporting internationally. These steps are to (1) make improvements to US GAAP when necessary, (2) actively participate in the development of IFRS, and (3) enhance relationships and communications with national standard setters.

Lastly, Mr Golden reiterated that the “best path forward for standard setters is to work cooperatively with the goal of ultimately agreeing on and adopting standards that have the fewest possible differences.”

Full text of the speech is available on the FASB website.

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