The paper, entitled The Road to Accrual Accounting in the United States of America, outlines the development of administrative arrangements for formal standards setting over 70 years at the local, state, and federal Government levels in the US and highlights key factors shaping the standards setting structure. It also provides a detailed overview of the conversion to accrual accounting by state and local governments (there are nearly 88,000 governmental units in the US), examines the standards issued by the Governmental Accounting Standards Board (GASB) to lead and support that conversion, and identifies key milestones in the conversion process. Chapters address:

• The Environment (includes a history of governmental accounting standards in the United States)
• The Road to Accrual-Basis Standards for State and Local Government
• Implementation Issues Associated with the Adoption of Accrual Accounting in State and Local Government
• US Accrual Standards in an International Context
• The Aftermath of the New Reporting Model

The paper was prepared by David Bean, Director of Research and Technical Activities at the GASB and staff at the GASB. It can be downloaded without charge from the IFAC Website. Click for Press Release (PDF 57k).

The discussion is reported in IVSC e-News April 2006 (PDF 130k). Here is an excerpt:

Both IVSC and FASB agree that as fair value measurement becomes more prevalent in financial statements, valuations that follow generally accepted valuation practices prepared by qualified valuation professionals will be needed. Accounting and valuation are two separate but complementary knowledge sets. Accounting and valuation professionals need a clear understanding of each others roles and responsibilities to foster increased synergy between the two professions. At the meeting on 10 March, FASB discussed its preliminary plans to formally solicit input from all interested parties on the need for a single set of valuation standards with particular emphasis on who should develop valuation standards and provide related implementation guidance. In the interim, FASB encouraged the IVSC to provide continuing input on ways to adequately address valuation issues in the future, considering the potentially differing national approaches that exist currently.

Commenting after the meeting Joseph Vella, IVSC chairman, said, "The IVSC recognises the need to review its structure to ensure that the most appropriate mechanisms for delivering global valuation standards is in place. In the meantime the IVSC is to launch a project to develop the current international valuation standards to more adequately cover the valuation of intangible assets for financial reporting purposes."

The draft Interpretation addresses a conflict between IAS 34 and the impairment reversal provisions of IAS 36 and IAS 39. While Deloitte supports the draft Interpretation as an interim solution, we believe it is "not ideal as a long-term and sustainable solution" because some aspects of IAS 34 conflict more broadly with the comparability provisions of the IASB Framework. We believe that IASB needs to address the broader issues. All past Deloitte letters of comment to the IASC and the IASB are Here.

We have updated the following IASB agenda project pages to reflect the discussions and decisions at the Board's March 2006 meeting:

• Accounting Standards for Small and Medium-sized Entities
• Business Combinations Phase II
• Conceptual Framework - Definition of Reporting Entity
• Consolidations including Special Purpose Entities
• Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidation
• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• IFRS 1 Amendment Relating to Cost of Subsidiaries in Separate Financial Statements of a Parent
• Insurance Contracts Phase II
• Joint Ventures
• Leases
• Performance Reporting
• Revenue Recognition
• Short-term Convergence: Borrowing Costs

The so-called 'corridor approach' that allows deferral of most actuarial gains and losses would be eliminated. IAS 19 currently also allows the 'corridor approach'. The proposal would also require that employers measure plan assets and obligations as of the date of their financial statements. FASB's exposure draft is the first phase of a comprehensive project to reconsider its Statement 87 Employers' Accounting for Pensions and Statement 106 Employers' Accounting for Postretirement Benefits Other Than Pensions. A second, broader phase will comprehensively address remaining issues. The FASB said it expects to collaborate with the International Accounting Standards Board on that phase, though the IASB does not yet have the project on its agenda. Comment period ends 31 May 2006. Click for (PDF 30k).

On 16 March 2006, the IASB issued an Exposure Draft (ED) of proposed amendments to IAS 1 Presentation of Financial Statements. This newsletter provides details about the ED. The ED results from the first stage (known as 'Segment A') of the IASB's project on performance reporting and, if adopted, would bring IAS 1 largely into line with the equivalent US standard as regards the matters addressed. Under the ED's proposals, an entity would be required to present all income and expenses separately from changes in its equity that arise from transactions with its owners. Entities would have a choice of presenting income and expenses in a single statement or in two statements. An entity would also be required to include in its financial statements a statement showing its financial position (balance sheet) at the beginning of the comparative period. The IASB has requested comments on the ED on or before 17 July 2006. You can find our Past IAS Plus Newsletters Here.

The companies will help the agency explore how new Internet based reporting technologies can improve the financial reporting process for investors, financial intermediaries, the SEC, and the companies themselves. Four of the companies are non-US registrants. The 17 members of the 2006 test group are:

• 3M Company
• Altria Group, Inc.
• Brazilian Petroleum Corporation
• Bristol-Myers Squibb Company
• The Dow Chemical Company
• Gol Intelligent Airlines, Inc.
• Infosys Technologies Limited
• Microsoft Corporation
• Mobile Reach International, Inc.
• Net Servicos De Comunicacao SA
• Old Mutual Capital, Inc.
• Pfizer, Inc.
• R.R. Donnelley & Sons Company
• South Financial Group, Inc.
• United Technologies Corporation
• Xerox Corporation
• XM Satellite Radio Holdings, Inc.

Click for (PDF 33k).

Herz spoke extensively about IASB-FASB convergence efforts. Click to download (PDF 511k). Testimony of other hearing participants may be Downloaded Here.

The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 28-31 March 2006. We have combined all of our notes from the meeting on a Separate Page.

The International Accounting Standards Board met at its offices in London on Tuesday through Friday, 28-31 March 2006. We have combined all of our notes from the meeting on a Separate Page.