Charlie McCreevy, EU internal market commissioner, urged the International Accounting Standards Board (IASB) last Thursday (May 7), at the Financial Reporting in a Changing World conference in Brussels, to be more flexible on mark-to-market accounting rules in the light of the current financial crisis.

The world’s accountancy standard setters will not be rushed into issuing a single set of global accounting standards

Despite recommendations at the April G-20 summit to make ’significant progress towards a single set of high quality global accounting standards’, the two standard setting boards, the London-based International Accounting Standards Board (IASB) and USA’s Financial Accounting Standards Board, are unlikely to accelerate any further the convergence of US General Accepted Accounting Principles (GAAP) and International Finance Reporting Standards (IFRS).

Reporting on progress following the G-20 summit, Hans Hoogervorst, the co-chairman of the Financial Crisis Advisory Group (FCAG) told UK Prime Minister Gordon Brown, head of the G-20 nations, fair value or mark-to-market accounting would take precedence over other issues.

However, this does not mean the convergence of the two sets of standards will be delayed. The two standard setting boards will merely stick to its planned schedule of an ‘orderly’, broad convergence by 2011.

It also means, it will not accelerate any further the road map established last year by USA’s Securities and Exchange Commission (SEC) which requires US companies to switch from GAAP to IFRS by 2014.

Despite focusing intensely on mark-to-market accounting issues, the boards are still on track to meet that goal, Tom Jones, a board member of the IASB, said at the Reuters Global Financial Regulation Summit in London.

‘I don’t think this fair value issue has derailed it at all. We’re quite prepared to delay other projects that aren’t on the key list to make it,’ he said.

That plan, however, is reportedly under an extended review by the SEC, because of the change of the administration shortly after its proposal.

US companies that have many overseas subsidiaries are likely to switch to the international system before 2014 for competitive reasons.

Last year, the SEC eased the financial reporting burden for foreign companies listed in the US when they were allowed to file their financial results in IFRS without reconciling them to US GAAP as had been previously required.

‘Many of my preparer colleagues in the US are now having to keep two sets of books,’ Jones said. ‘They are saying, “We know it’s coming, we know it’s inevitable, just give us a date”.’

But he said companies would rather have a longer lead time from a cost perspective, because the change to IFRS might involve systems change, and having to do a quick ramp-up could be extremely expensive.

Further reading:

Mark-to-Market Takes Precedence in global Crisis