Ahead of the next G20 in Pittsburgh, the US has an opportunity to show leadership and commitment to the principle of an accountable, transparent and sound system of international regulatory cooperation. ACCA has long argued that this is best achieved though the adoption of one set of reporting standards, the principles-based IFRS, to meet global market needs.
Along with others, ACCA also warned against political interference in the setting of international standards, as the reliability and predictability of accounting standards are key prerequisites for a sustainable and well-functioning capital market. Robust and credible accounting standards are essential for a speedy recovery from the financial crisis.
We have issued a news release concerning the lack of co-ordination between the world’s two main accounting standard setters on a vital new standard on fair value.
'Currently, the two boards seem to be moving at different speeds and towards different positions,' says Richard Martin, ACCA head of financial reporting. 'There are highly significant differences in the proposals which cannot be skated over.
'It also seems possible that IASB will have issued the first part of its new standard on financial instruments before FASB has consulted in the US on any proposals. This sequence continues the problem of demands for a "level playing field", which have prompted some adverse developments in financial reporting over the last year.
'We would prefer that the use of fair value was not expanded significantly from where we are,' continues Richard. 'There doesn't seem much support for the full fair value model that FASB is promoting.
'If more assets and liabilities are valued according to their market price, more volatile balance-sheets could result. This could produce a pro-cyclical result, as the market tends to overshoot on both the falls and the gains.'
Richard also expressed concern that a phased introduction of the new standard might create problems for people who prepare or use accounts, as many preparers will want to see the whole package before making their various choices and set their new policies. There are significant risks that there will be problems with having parts of a new standard to co-ordinate and work with parts of the old standard.
Along with others, ACCA also warned against political interference in the setting of international standards, as the reliability and predictability of accounting standards are key prerequisites for a sustainable and well-functioning capital market. Robust and credible accounting standards are essential for a speedy recovery from the financial crisis.
We have issued a news release concerning the lack of co-ordination between the world’s two main accounting standard setters on a vital new standard on fair value.
'Currently, the two boards seem to be moving at different speeds and towards different positions,' says Richard Martin, ACCA head of financial reporting. 'There are highly significant differences in the proposals which cannot be skated over.
'It also seems possible that IASB will have issued the first part of its new standard on financial instruments before FASB has consulted in the US on any proposals. This sequence continues the problem of demands for a "level playing field", which have prompted some adverse developments in financial reporting over the last year.
'We would prefer that the use of fair value was not expanded significantly from where we are,' continues Richard. 'There doesn't seem much support for the full fair value model that FASB is promoting.
'If more assets and liabilities are valued according to their market price, more volatile balance-sheets could result. This could produce a pro-cyclical result, as the market tends to overshoot on both the falls and the gains.'
Richard also expressed concern that a phased introduction of the new standard might create problems for people who prepare or use accounts, as many preparers will want to see the whole package before making their various choices and set their new policies. There are significant risks that there will be problems with having parts of a new standard to co-ordinate and work with parts of the old standard.
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