October 26, 2009 / 11:03 PM / 10 years ago

Accounting boards try to reconcile fair value views

*FASB, IASB still differ on proposed fair value expansion

*Boards to explore reconciliation on balance sheets

*New rules expected by end of 2010

By Emily Chasan

NEW YORK, Oct 26 (Reuters) - U.S. and international accounting rulemakers still disagree on a controversial proposed expansion of mark-to-market accounting rules, but said on Monday they would explore ways to allow investors to make easy comparisons if their final rules differ.

At a joint meeting in Norwalk, Connecticut on Monday, members of the London-based International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) sparred over whether fair value, or “mark-to-market,” accounting rules should be expanded to a broader array of financial assets, such as loans and deposits.

In a move opposed by the banking industry, the FASB has proposed that all financial instruments be valued at market levels, while the IASB has proposed to have those assets valued at “amortized cost,” which would mostly provide information about expected cash flows.

“If FASB and IASB can’t agree on mixed model or full fair value model ... the next best thing is something to move between the two,” Sir David Tweedie, chairman of the IASB, said on Monday.

At the meeting, 11 of IASB’s board members said they would be open to exploring some kind of presentation for fair value for more financial assets on corporate balance sheets so that investors would be able to quickly reconcile numbers in U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Four members of the IASB disagreed, as some said two sets of numbers could be confusing.

Investors have been telling the FASB staff that they believe there is value in seeing both numbers, a FASB staff member said at the meeting.

At the meeting, some accounting rulemakers said they doubted changing the presentation would take care of all the differences between the approaches, and the boards would have to reexamine classification and measurement issues as well.

Others said the boards must decide which of the two approaches is best suited for the modern era rather than allowing the use of both, which could add costs for companies.

“I think fair value gets a lot closer to showing actual financial condition than amortized cost,” FASB chairman Robert Herz said at the meeting.

FASB said it expects to release a proposal on the mark-to-market expansion in late January or early February and complete the rulemaking process by the end of 2010. The FASB and IASB agreed at the meeting to try to meet several times to resolve as many differences as they can.

“By the end of 2010 ... if we can’t get it together, we should be appreciably together,” Tweedie said. (Reporting by Emily Chasan)

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