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May 27, 2010

IASB and FASB told exposure draft ‘tsunami’ could damage standards

Concerns are growing that the huge volume of IFRS and US GAAP exposures drafts due for release in the next six months will lead to lower quality standards.

The International Accounting Standards Board’s (IASB) work plan lists 14 exposure drafts that have either been released this month, or will be released by the end of the year.

Most of these are being prepared in partnership with the US Financial Accounting Standards Board (FASB).

Stig Enevoldsen, a Deloitte Denmark partner and former European Financial Reporting Advisory Group (EFRAG) chair, said the volume of drafts is difficult for stakeholders to deal with.

“Because the IASB has so much on its plate we may not get the best possible solutions,” he said.

“There is so much out for exposure so it is difficult for [EFRAG] to get time to respond properly.

“It is a challenge to ensure we can respond at the normal high technical level to that many exposure drafts because it is like a tsunami right now.”

 

Due process concerns

The US-based Financial Executives International (FEI) has written to the IASB and FASB to express concern that the number of exposure drafts will affect the boards’ due processes.

FEI warned that if the projects are not scaled back, the boards will probably need to amend the standards in the near-term “thereby potentially undermining the confidence in our financial reporting system”.

US Securities and Exchange Commission chief accountant James Kroeker has also said he would support the IASB and FASB cutting the number of convergence projects due in June 2011 if there was good rationale for the delay.

Kroeker said it is more important to ensure that a thorough exposure process takes place and the final standards are a long term and sustainable solution.

 

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