When accounting goes unaccounted for
Kroeker reiterated earlier statements that he and SEC Chair Mary Schapiro had made, indicating the SEC was turning its attention this fall to the proposed IFRS roadmap. When asked about the date, Kroeker said, “There will be follow-up on the roadmap this fall.” Asked to define the word “fall,” he noted that the season ends on Dec. 21.
Fall ended at 12:47 pm EST today. Anyone seen this map?
For the love of everything that is good and holy, would someone like to be the FASB Chairman? Or the Chief Accountant of the SEC?
We realize that they’re both thankless jobs but we need people in there that are going to make some things happen.
After Jim Kroeker said this:
“[T]he boards have agreed that the projects that they’re working on are areas that need improvement, not just under U.S. GAAP but under IFRS, then I think convergence efforts should continue or would continue without an SEC finalization of the roadmap,”
Bob Herz is now saying this:
“[T]he ball is mostly with the [SEC] at this point” … Herz noted the SEC has yet to rule on the “roadmap” for U.S. compliance with IFRS it proposed a year ago.
So, let’s get this straight: JK is said, “You go first.” Now Bob Herz is saying, “No, you go first.” Does anyone want to introduce these two clowns? Are they waiting for knighthood before they move on this?
We suggest that somebody toss Mary Schapiro in there to A) complete the trilogy of stooges and B) so she can bonk their heads together. That might get them motivated.
Herz: U.S. Convergence Ball Is in SEC’s Court [CFO]
Yesterday the FASB and IASB got together and spent 23 pages convincing everyone that convergence of accounting rules will happen by June 2011. If you haven’t been convinced by the steps one paragraph statement that was issued saying how ‘encouraged’ she is about the latest re-re-affirming.
There is no doubt in anyone’s mind that there will be a single set of accounting rules — for the entire financial reporting universe — rolled out and everything will be right with the world in June 2011.
But will it be a single set of standards? Edith Orenstein of FEI Financial Reporting Blog:
It is interesting to note that the FASB-IASB joint statement speaks in some places of converging to a ‘single’ set of standards, and in other places of converging to a ‘common’ set of standards. To some, these terms can mean a world of difference. However, the terms are often used interchangably by many different parties. For example, here are some excerpts from the joint statement:
We are redoubling our efforts to achieve a single set of high quality standards within the context of our respective independent standard-setting processes.
Our goal is to develop together common standards that improve financial reporting in the US and internationally and that foster global comparability. Achieving such improvements is consistent with the objectives of the IASB that are set out in the Constitution of the IASC Foundation. It also fulfils the responsibility the FASB has under US law and the Securities and Exchange Commission’s 2003 Policy Statement to consider, in developing standards, whether international convergence is necessary and appropriate in the public interest and investor protection.
(emphasis original)
That clears it up, doesn’t it? So it’s either a “single set” or “common standards”? FEI Blog thinks it’s a progression, “Presumably, once a set of ‘common standards’ is acheived, the next step would be to officially adopt one set (again, presumably, IFRS, which is used in over 100 countries) as the ‘single’ global standard.”
While this may be the case it still doesn’t mean that everything will be the same.
CFO:
“Convergence doesn’t necessarily mean the same,” says D.J. Gannon, a Deloitte audit partner and the firm’s expert on international financial-reporting standards. In fact, Gannon says, there is no expectation that any of “the lingering differences” between rules that are already converged will be handled through standard-setting. “So the bottom line is that companies [reporting results under U.S. generally accepted accounting principles] are going to have to deal with those differences if they apply international financial-reporting standards at some point in the future.”
Good lord. So for all practical purposes, it sounds like there will still be differences. Frankly, we’re disappointed in this revelation. If someone had told us from the get-go that it wasn’t going to be 100% the same accounting rules we wouldn’t have made such a big stink about the absolute impossibility of the endeavor. Going forward we’ll be taking this even less serious.
FASB, IASB Reaffirm Convergence By June, 2011 [FEI Financial Reporting Blog]
“Convergence Doesn’t Necessarily Mean the Same.” [CFO]
There’s no doubt that you’ve been awaiting the IASB’s new fair value rule with feverish anticipation. Well, your wait is nearly over because when Sir David Tweedie says he’s going to do something, by God, he means it:
In an address to a meeting of European Finance Ministers, which have in the past been critical of the IASB’s response to the financial crisis, Tweedie has sought to ease concerns by announcing that he is on track to deliver a new fair value standard by the end of this year.
“I gave a commitment to deliver on this timetable. We will publish the new standard in November,” he said.
This is all very exciting for Tweedie and the IASB since it feels pretty damn good anytime you stick it to your critics but…
Small problem: The new rule still won’t require loans to be marked to fair value which is the exact opposite plan of Bob Herz and the FASB, “FASB’s proposal will see all assets measured at fair value. The IASB’s mixed measurement model would see banks’ loan books valued on an amortised cost basis.”
Obviously the two rulemakers, fresh off the tongue lashings they received from their respective governments for their part in the worldwide economic meltdown, decided that they had no choice but to put out the fair value fire pronto. Meanwhile, convergence of accounting standards (what the IASB is really serious about and could be the next Big 4 gravy train) remains a pipe dream.
Fair value standard will be released next month: Tweedie [Accountancy Age]
Really, he said that global standards were ‘imperative’ which carries a much more serious connotation and we’d hate to sell Big Jim short:
‘It is imperative that there is one set of financial reporting standards for the world if the quality and comparability of investor information is to be protected.’
And in an amazing coinkydink, that’s what everyone at the G-20 said too:
More, after the jump
In a statement the leaders said they: “call on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011.”
Since so many big shots were in the Burgh, last week, JT figured he’d just put it out there that his firm was FIRST! to say, “Yeah, we’re down for redoubling our efforts! Whatever that is, we’ll do anything! Don’t know about the rest of you slackers but we’re damn proud to get on this. June 2011? No problem. Am I right people?”
Ernsters? Ready to double down? It’s imperative, you know.
Big Four firm backs G20 accounting stance [Accountancy Age]
Even though the convergence of IFRS and U.S. GAAP seems like a DeLorean ride away accounting professors polled believe that it should be included in the curriculum, according to Web CPA:
More, after the jump
The survey, by KPMG and the American Accounting Association, found that half of the professors who responded to the survey said they thought a low sense of urgency exists among U.S. regulators to adopt IFRS by a “date certain,” while only 16 percent believe regulators have a high sense of urgency.
Regardless of academics’ pessimism about the SEC getting their shit together and making this marriage of accounting rules happen, the slow integration into the American curriculum is still occurring:
Despite this challenge, 70 percent said they have taken significant steps to incorporate IFRS into the curriculum. In addition, 83 percent believe IFRS needs to be incorporated into their curricula by 2011…Given the dynamics of the current regulatory environment, 79 percent of faculty believe that U.S. GAAP should continue to be taught over the next three to five years, while progressively incorporating more IFRS concepts via a compare-and-contrast approach as the conversion date approaches.
A majority of the respondents to the survey also expect IFRS to be included in the CPA Exam by 2012/2013 and in intermediate accounting textbooks by 2011/2012.
For those of you still cracking the books, discuss if your profs have brought this up and what kind of priority they’re putting on IFRS. We’re not holding our breath for anything meaningful from TPTB.
Accounting Professors Urge IFRS Education [Web CPA]
Remain calm IFRS fanboys and girls. You’re probably sick of our piss-poor attitude with regard to progress on anything remotely related to accounting rule convergence.
Well now you can tell us to suck it as the better-late-than-never anointed Chief Accountant, James Kroeker because he, “assured a roomful of accounting experts that the roadmap is on track,” according to CFO.
Continued, after the jump
We’ll give Kroeker credit for not using the economic crisis as an excuse like every other talking head or bureaucrat in the universe. No, his turning the tables, “Kroeker noted that the crisis may have, in fact, underscored the importance of IFRS. That’s because the discussions related to the credit crunch were global in scope, as were the responses and potential solutions, he added.”
Small issue: Kroek did admit is that even though a few companies could probably be coverted by 2011, most wouldn’t be required to do so until 2016. That’s all very nice but we’re sure we’ll all be driving flying cars by then.
Global Standards Alive and Kicking, SEC Accounting Chief Says [CFO]
Anyone okay if we just called this whole convergence thing off? Seriously. We understand that many accountants are perfectionists but healthcare reform seems to have a better chance than this whole shitshow.
Yesterday’s Wall St. Journal claims that the FASB’s biggest wig, Bob Herz is stating, albeit implicitly, that the FASB’s fair value rule will be more strict than the IASB’s. Herz-dog, being a little more political put it this way:
Pleasant disagreement, after the jump
“I hope we can come up with something that both achieves convergence and improves the current state” of accounting rules, Herz said at a roundtable discussion on the fair-value issue at FASB headquarters. “We’re obviously keenly aware of the difficulties of achieving both goals together.”
Herz later said in an interview that while FASB would do its best to harmonize its approach and the IASB’s, “we also want to make sure we come up with a good answer” to improve financial statements that U.S. investors look to.
That’s about as combative as The Herz gets, although, we, like the Journal, will take any chance we can get to embellish otherwise, yawn-worthy comments made by wonky accounting bureaucrats.
More:
John Smith, an IASB member who also participated in the roundtable, said both boards will try to agree on a fair-value rule, but each has its own process to follow, and “at the end of the day, we won’t know until we finish the process.”
The difficulty in harmonizing the two approaches stems from the sharp disagreements over expanding the use of fair-value accounting. Smith called it “a religious war.”
Okay, so we’re not really convinced these guys give a damn either way if accounting rule convergence occurs, especially fair value. So would everyone just knock it off and quit pretending like it’s so bloody important?
Besides, this is a “religious war”. And everyone knows that wars in the name of the Almighty (in this case, GAAP) NEVER end, so let’s just count on this being unresolved through the next millennia.
Academics in the U.S. aren’t too psyched about the benefits of IFRS, according to Compliance Week:
The United States already meets a high level of reporting quality relative to other countries as a result of various “institutional features,” said [Peter] Wysocki [Professor at MIT]. Those include things like an active investor and analyst community, a rigorous audit process, and oversight by the Securities and Exchange Commission, among others, he said.
“It’s a little difficult to argue a move to IFRS will result in significant improvement in reporting quality,” Wysocki said. “We’re already at a high level because we already have those institutional features in place.
The debate over convergence has reached Biggie/Tupac fever and now that U.S. GAAP has got American bookworms shouting about how IFRS isn’t all that, we expect that academics on the other side of the pond will get involved and the debate will get fiercely geekier.
Academics: Move to IFRS Won’t Boost Reporting Quality [Compliance Week]