G20 leaders have delayed the completion deadline of the IFRS and US GAAP convergence project until the end of 2011, following a standard setters’ plead for more time.
In endorsing a single set of international accounting rules, world leaders made little reference to the previous June 2011 deadlines, seeming easing the pressure on standard setters to complete the project by that date.
The deadline is particularly important because a number of major economies are due to adopt IFRS in 2011 and 2012 and it would be ideal for them to have a stable base of standards to start on. It is also significant because the world’s two largest economies, the US and Japan, are considering the continued improvement and convergence as they decide whether to adopt IFRS.
But in recent months financial reporting stakeholders have become increasingly concerned they would not have enough time to comment on the unprecedented number of exposure drafts the IASB and FASB would need to release in the next three months to meet the deadline.
Modified convergence timeline
The boards have responded by modifying their work plan so no more than four significant exposure drafts are issued in any one quarter.
In a letter to the G20 ahead of their meeting in Canada in late June, the boards said they have retained targeted completion dates of June 2011 or earlier for projects where the need for improvement to IFRS and US GAAP are most urgent.
They said they have also identified the projects where a later completion date would be appropriate because they address matters that are of a lower priority or where further research and analysis is necessary.
The one notable feature of a progress report that explains the modified plan to the G20 is the absence of a commitment to achieve a converged financial instruments standard.
The two boards are currently considering very different proposals for financial instruments accounting and if they cannot come to the same conclusion, may have to develop reconciliation requirements.
Revised work plan
The following milestones have been set for the major convergence projects:
- Consolidation: exposure draft in Q4, 2010; converged standard in Q2 2011;
- Derecognition: The IASB will finalise improved disclosure requirements that are similar to recently amended US GAAP requirements.
- Balance Sheet Netting of Derivatives and Other Financial Instruments: exposure draft in Q4 2010; converged standard in Q2 2011;
- Financial instruments: IASB hedge accounting exposure draft in Q3 2010; converged standards in Q2 2011;
- Financial statement presentation – presentation of other comprehensive income: converged standard in Q4 2010;
- Financial statement presentation – main project: exposure draft in Q1 2011; converged standard in Q4 2011;
- Financial statement presentation – discontinued operations: exposure draft in Q1 2011; converged standard in Q4 2011;
- Financial instruments with characteristics of equity: exposure draft in Q1 2011; converged standard in Q4 2011;
- Leases: Exposure draft in Q3 2011; converged standard in Q2 2011;
- Fair value measurement: exposure draft in Q2 2011; converged standard in Q1 2011;
- Revenue recognition: exposure draft in Q2 2010; converged standard in Q2 2011;
- Post employment benefits: standard in Q1, 2011