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|Source:||A.M. Best Company, Inc.|
Two accounting standards boards pushed back for a “few months” their June target date for reaching international accounting standards on revenue recognition, leases, financial instruments and insurance contracts.
“We jointly concluded that, without extending the work out indefinitely, we all could benefit from a few more months to develop these standards, some of which really go to the core issues of many companies,”
“We’ve always emphasized … that we would never release a standard before it’s ready, and ultimately, it just has to be high quality or you just can’t issue,” said
A.M. Best Assistant Vice President
“FASB prides itself on effective due process,” Chirico said, adding that the board tries to factor comments from stakeholders into its decision-making process, striving to ensure changes aren’t too burdensome. In this case, the boards are prioritizing quality over timeliness.
“These issues are complex and affect different businesses in different ways,” said Chirico, a certified public accountant who has been following the boards’ negotiations.
The goal of the convergence projects is to establish a single set of standards that international investors can rely on to make comparisons among global companies. There were two main reasons the standards boards were striving for the June target date, Chirico said. One was pressure from the Group of 20 nations, which advocates convergence, and the second reason is Tweedie, who has served as IASB chairman since 2001, is stepping down at the end of June. He will be succeeded by
Insurance trade groups have expressed concerns about the accounting-standards convergence effort. In a January letter to Seidman, the
Seidman said during the podcast that while the boards have yet to decide on effective dates for the standards, “we do want to reassure people that we plan to allow ample time for them to understand the requirements and plan an effective transition to the new standards once we do make those decisions.”
Complicating the discussions concerning the insurance-contract standard, the two boards are working on different time tables.
Both IASB and FASB have exposure drafts on revenue recognition and leasing. FASB is taking another look at its exposure draft on financial instruments.
Seidman said the boards should issue a progress report on the convergence effort in a few days.
“These issues are complex enough, and the feedback from the exposure drafts is concerning enough,” that the boards “need to take their time and get this right,” Chirico said.