Volcker: IASB and FASB on Collision Course
Speaking at the International Organization of Securities Commissions conference this week in Montreal, White House senior economic adviser Paul Volcker appealed to the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to come together in their financial instrument reforms.
“What appeared to be two organizations converging…now looks like a collision,” said Volcker. The FASB favors mark-to-market; the IASB has a mixed-measurement model in place which enables banks to measure their held-to-maturity instruments at amortised cost. If the two groups cannot reach agreement on this issue and others by June 2011, it may jeopardize US adoption of international standards.
With the deadline for an agreement looming, Volcker added, “I hope they can come together by the end of the year.”
Fair Value Accounting and Audit Gap Needs to Close
Accountants attending an industry summit in Singapore have complained about a significant gap that exists between accounting and auditing practices. Whereas, they note, accounting standards were able to adapt quickly to the financial crisis, auditing standards have lagged behind.
Fair value accounting and auditing of future cash flows are two areas where this gap is particularly apparent, said Tham Sai Choy, member of the Singapore Accounting Standards Council.
Although there is a general industry awareness of this disparity between auditing and accounting standards, so far there has been no meaningful dialogue to resolve the discrepancies.
Tham explained, “All the numbers need to go through the auditors before they finally go out as auditor information to the market. So that dialogue between the accounting standard setters and the auditing standard setters is something that we need to go and think about again.”
