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The Advisory Committee on Improvements to Financial Reporting presented a progress report on making financial information more useful for investors and reducing unnecessary complexity.
With regard to the convergence of US GAAP with IFRS the Committee states that there are “various paths to convergence, and it may take years for full convergence to be achieved” and proposes enhancements to the financial reporting system in the U.S. “GAAP will probably need to become less rules-based in order to promote the goal of global convergence”, the Committee notes.
“IFRS contains a number of alternative accounting policies for the same activity, and there are political pressures to add exceptions in certain countries”, the report states. “As part of the effort to promote global convergence, we urge the IASB to continue to reduce the number of alternative accounting policies currently available and to resist the political pressures for country exceptions.”
Among the several proposals the Committee issues, it states that “there should be a single standards-setter for all authoritative accounting standards and interpretive implementation guidance that are applicable to a particular set of accounting standards, such as GAAP or IFRS.”
Chapter one of the report deals with substantive complexity; chapter two on the standards-setting process; chapter three on audit process and compliance; and chapter four on delivery of financial information.
Later in 2008, the Committee will identify and analyze some of the issues to be resolved in the move toward global convergence of accounting standards.
In July 2007, the SEC chartered the Advisory Committee on Improvements to Financial Reporting to examine the
Progress Report on Improvements to Financial Reporting