27 February 2006

US FASB and IASB sign Memorandum of Understanding

The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) published a Memorandum of Understanding to develop common accounting standards for use in the world’s capital markets. The Memorandum contains a ‘roadmap’ for the removal of the reconciliation requirement for non-US companies that use IFRSs and are registered in the United States. The roadmap also addresses auditing and enforcement, topics that are not accounting standard-setting issues and will require the co-operation of regulators and auditors.

The boards agreed that instead of trying to eliminate differences between standards that are both in need of significant improvement, a new common standard should be developed.

Convergence work will continue to proceed on the following two tracks:

First, the boards will reach a conclusion about whether major differences in focused areas should be eliminated through one or more short-term standard-setting projects, and, if so, the goal is to complete or substantially complete work in those areas by 2008.

Second, the FASB and the IASB will seek to make continued progress in other areas identified by both boards where accounting practices under US GAAP and IFRSs are regarded as candidates for improvement.

Press release
Memorandum of Understanding

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