US FAF offers to contribute to the funding of the IFRS Foundation to help facilitate the completion of the joint projects
29 Jan 2014
The US Financial Accounting Foundation (FAF), which is responsible for the oversight, administration, and finances of the Financial Accounting Standards Board (FASB), has announced that it will contribute up to $3 million to the IFRS Foundation “to support the completion of international convergence projects”. The FAF stressed that the contribution, to be made in up to three payments of $1 million during 2014, is non-recurring.
The IASB and FASB have still four major convergence projects to complete: revenue recognition, leasing, financial instruments (both classification and measurement and impairment), and insurance. Revenue recognition is nearing completion (finalised pronouncements by IASB and FASB are currently expected in the first quarter of 2014), the financial instruments topics could be completed in the second half of 2014, insurance and leases have not yet been given an expected publication date.
While the aim of the contribution is to complete the convergence projects, collaboration will continue even after the finalised pronouncements have been published. FASB and IASB announced that they would form a joint transition resource group for revenue recognition in July 2013. The FASB is also a member of the IASB's Accounting Standards Advisory Forum (ASAF).
IFRS Foundation officials have long urged the US to provide more funding to the work of the Foundation. In the SEC's final staff report on IFRS published in July 2012, the SEC staff stated: "Currently, the IFRS Foundation Trustees have been unsuccessful in obtaining the funding for the portion of the IASB budget allocated to the United States." In their October 2012 response to the report, the IFRS Foundation reacted by stating: "[T]he U.S. has to date not contributed a proportionate amount to the IFRS Foundation's budget. [...] We note that, while around 20–25 percent of the total seats in the Foundation's different bodies are currently held by the U.S., the U.S. contributions amount to less than 10 percent of the total country contributions to the Foundation's budget." The Trustees also claimed that a proportionate US contribution based on GDP would amount to just over £4 million. As the annual report of the IFRS Foundation shows, US contributions to the IFRS Foundation's funding were roughly £1.2 million in 2012 and the present climate does not suggest that a significant increase is likely for 2013.
The FAF trustees made one previous contribution of $0.5 million to the IFRS Foundation in 2011. In addition, FASB has dedicated technical staff to the convergence projects.
Please click for access to the announcement of the FAF website.
