FASB-IASB Update G20 Leaders With Progress Report On Convergence

Yesterday, FASB and the IASB sent a letter to the G20 Leaders, updating them with details of the modification to their plan for convergence of accounting standards, first noted in a brief letter to the G20 Finance Ministers on June 2nd.

The letter includes a 15-page detailed progress report, which shows some projects moving beyond the original June, 2011 deadline (generally, to no later than "4Q2011") although there are a few references to 2012 and beyond, such as for derecognition and emissions trading schemes.

The FASB-IASB letter emphasizes:

We understand the importance that the G20 Leaders attach to the issue of accounting standards. At the Pittsburgh Summit, held in September 2009, the G20 leaders stated “We call on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011. The International Accounting Standards Board’s (IASB) institutional framework should further enhance the involvement of various stakeholders...

We also noted that many stakeholders have voiced concerns about their ability to provide high quality input on the large number of major exposure drafts that were planned for publication in the second quarter of this year...

The Pittsburgh Leaders Statement [G20 Leaders Summit, 2009]highlighted the importance of stakeholder engagement. We believe the modified work programme, which phases the publication of exposured drafts and related consultations, enables the broad-based and effective stakeholder participation in due process that is critical to the quality of our standards.

The nature of the comments received on our exposure drafts will determine the extent of the redeliberations necessary and other steps and efforts that will be required to reach this goal.

The last sentence noted above could also significantly impact the ultimate timing of final standards; i.e., the extent and nature of comments received on the FASB-IASB Exposure Drafts (proposals), not only the time it takes the boards to issue the proposals, but the time it takes them to 'redeliberate' the proposals by considerig comment letters received, and feedback received in other outreach, such as at conferences, roundtables, meetings with professional associations, (e.g., FEI's Committee on Corporate Reporting and Committee on Private Company Standards sent the following comment letters to the boards recently regarding the convergence timetable: FEI CCR letter; FEI CPC-S letter).

The June 25 FASB-IASB correspondance to the G20 leaders was addressed to The Honourable Stephen Harper, Prime Minister of Canada, host of the G20 Toronto Summit set to take place June 26-27 in Toronto.

FASB, IASB Release Revenue Recognition ED

Yesterday, the Financial Accounting Standards Board and the International Accounting Standards Board released for public comment their Exposure Draft (ED) of a proposed joint standard on Revenue Recognition. The ED, which carries a comment deadline of Oct. 22, 2010, has is entitled: Revenue Recognition (Topic 605): Revenue from Contracts with Customers (as posted on FASB version) and Revenue From Contracts With Customers (as posted on IASB website).

Major Changes In Proposed Standard
According to FASB-IASB's joint press release:

If adopted, the proposal would create a single revenue recognition standard for International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) that would be applied across various industries and capital markets. The publication of this joint proposal represents a significant step forward toward global convergence in one of the most important and pervasive areas in financial reporting. The proposed standard would replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. In US GAAP, it would supersede most of the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification.

The core principle of the draft standard is that an entity should recognise revenue from contracts with customers when it transfers goods or services to the customer in the amount of consideration the entity receives, or expects to receive, from the customer.

The proposed standard would improve both IFRSs and US GAAP by:
- removing inconsistencies in existing requirements;
- providing a more robust framework for addressing revenue recognition issues;
- improving comparability across companies, industries and capital markets;
- requiring enhanced disclosure; and
- clarifying the accounting for contract costs.

Public Comments Due in October; Roundtables Coming In November
According to FASB's homepage, public roundtables on the ED will be held on Nov. 5 and 8, 2010.

Links To Additional information
Additional information on what is informally referred to as the "Rev Rec" ED can be found in:

• FASB/IASB Joint press release
• FASB in Focus
• Podcast featuring FASB Board Member Leslie Seidman speaking on the Rev Rec ED
• Investor outreach for comments
• FASB's Rev Rec Project Page

House-Senate Conf. Comm. Agrees On Fin Reg Reform Bill (Dodd-Frank Act), For Vote Next Week

After pulling a 20-hour marathon session, the House and Senate conference committees agreed early this morning on the Financial Regulatory Reform Bill, which will be voted on by the full House and Senate next week, and if passed, sent on to President Barack Obama to sign into law. Here are some of the early morning reports on major news websites:

Congress Reaches Deal on Financial Bill (Edward Wyatt, NYT)
U.S. Lawmakers Reach Accord on New Finance Rules (Damian Paletta, WSJ)
House, Senate Leaders Finalize Details of Sweeping Financial Overhaul (Brady Dennis, WashPost)
U.S. Lawmakers Approve Financial Overhaul; Marathon Session Produces $19 bn levy and Softening of Volcker Rule (Tom Braithwaite, Francesco Guerrera and Justin Baer, FT)

As to timing of when the bill could become law, as noted in the WashPost article cited above:

The dawn compromise set up a potential vote in both houses of Congress next week
that could send the landmark legislation to President Obama by July 4.

Proposed Name of Law: Dodd/Frank Act
Damian Paletta reported in the WSJ Blog this morning that the legislation, if signed into law, would be called the Dodd/Frank Act.

In a statement issued today, Sen. Dodd, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, said:

Over the past two years, America has faced the worst financial crisis since the Great Depression. Millions of Americans have lost their homes, their jobs, their savings and their faith in our economy.”

“The American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly.”

“This bill meets that challenge.”

Check Financial Executives International's website, www.financialexecutives.org, and this blog www.financialexecutives.org/blog, for updates on legislation, accounting and tax news news, practical research reports from our research affiliate, the Financial Executives Research Foundation www.ferf.org, and more.