ECOFIN CounciI: IASB and FASB in continuous talks to achieve financial reporting convergence
17 March 2010
Progress on IFRS 9 - the first phase of IAS 39 reform - is underway, Sir David Tweedie said. EU stakeholder groups, including some major banking institutions across Europe and elsewhere and national standard-setters, have already called for IFRS 9 to be endorsed.
Sir David Tweedie presented the following IASB issues:
· Progress on convergence between the IASB and the FASB. As an example of the recently intensified activity, the two boards are now meeting every month and have had more than 100 hours of joint meetings since the November statement. This month the boards are meeting jointly by video link on three consecutive afternoons, and then in person in London for three consecutive days the following week. These intensive discussions are achieving positive results. Seven joint proposals are proposed for publication in the next quarter. Individually, each board is proposing other changes to bring its own standards in line with each other.
· Enhanced stakeholder engagement in IASB’s work and agenda-setting. The IASB has stepped up its efforts to engage a broader range of interested parties in the early stages of standard development. Its consultation on IFRS 9 is an example of this effort. It held more than 100 meetings with investors, prudential supervisors, capital market authorities and other stakeholders in Europe and elsewhere to discuss the possible impact of its proposals. The IASB hosted round tables in Asia, Europe and the United States. To consider the views of interested parties, it has held additional board meetings and education sessions.
· IFRS 9 and addressing European concerns on classification. A number of countries, including Japan, Brazil, China, Hong Kong, South Africa and Australia have taken steps to permit, or even require, the use of the new IFRS 9. Similarly, EU stakeholder groups, including some major European banking institutions and organizations representing the investment community across Europe and elsewhere, and national standard-setters, have called for the endorsement of IFRS 9. At the same time, the IASB understands that, despite the earlier request for speed in completing this phase of the project, the European Commission now wishes to follow the normal endorsement procedure for IFRS 9.
· Next steps on financial instruments reform. The publication of IFRS 9 marked the completion of the first phase of the IASB’s IAS 39 reform. It is now tackling the important issues of provisions and hedging, as well as financial liabilities to which the IASB alluded before. In particular, it is committed to pursuing a more forward looking provisioning model. In November 2009, the IASB published a discussion document for an expected cash flow approach for provisions. The IASB appreciates that it has not completed its work on provisioning.
He concluded by saying that “The European Union has been the catalyst for the effort to adopt IFRSs globally. With more than 115 countries committed to IFRS and nearly all G20 members on their way to full IFRS adoption, your support for the IASB’s work as an independent but publicly accountable standard-setter is greatly appreciated.”
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