Keywords: Accounting standards, IFRS, IASB, FASB, IAS 39, Robert Herz
Each new step in this process appears to widen the gap with US GAAP: whereas IFRS 9 does not challenge the IAS 39 model for measuring financial liabilities (by default, at amortised cost), the FASB is leaning at present towards an extension of financial liabilities measured at fair value.
The resignation of the FASB chairman, Robert Herz, announced last August and effective from 1 October 2010, occurred concurrently with an expansion of the Board from 5 to 7 members. These changes give the FASB an opportunity to reconsider certain aspects of its project on financial instruments. Note that Robert Herz defended a “full fair value” approach at the time of the publication of the exposure draft, whereas the new interim chairman, Leslie F. Seidman, supported a mixed measurement model.
Should the FASB opt to give greater importance to amortised cost, this would give a boost to the project for the convergence of US GAAP and IFRSs. The G20s aim of establishing a single standard on financial instruments before the end of June 2011 still stands.
However, we have to admit that the timetable is very tight, particularly if there is a need to re-expose some phases of the project.