Sir David Tweedie mentioned that there are two key activities coming to a head this year. First, the IASB and the FASB are now nearing the completion of a nine-year programme to improve International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) and to bring about their convergence. Second, the US Securities and Exchange Commission (SEC) will make a decision on the use of IFRSs by US domestic companies.

The SEC’s decision will be felt well beyond the borders of the United States. Today, more than 100 countries either require or permit the use of IFRSs for listed companies in their domestic markets. This includes, among the Group of 20 (G20) members, Australia, Brazil, Canada, the 27 member states of the European Union, Korea and Mexico. However, China, India and Japan have yet to make a formal and full commitment to domestic adoption of IFRSs. Their work towards adopting IFRSs in their countries has been, in part, predicated on the implicit understanding that a truly global accounting standard must include the United States. They are therefore closely watching the SEC’s decision.

His vision, not surprisingly, includes IFRSs as the common basis of financial reporting for listed companies throughout the world, including the United States. These standards, applied consistently, will provide high quality, transparent and comparable information for investors and other users of financial information. The standards must be based upon clearly articulated principles and not unnecessarily laden with detailed rules and guidance.

The work of the IASB will not be complete when the convergence programme is finished. The IASB will provide sufficient time to implement the new standards and a period of calm for investors and companies to get used to the new standards resulting from the Memorandum of Understanding work.

Sir David Tweedie stated that even though the conclusion of the Memorandum of Understanding formally ends the exclusive partnership between the IASB and FASB, the IASB wants to retain a strong partnership with the FASB, which they would expect to continue to play a leading role in the international standard-setting process.

Press release