NEW YORK (Reuters) - The head of the Financial Accounting Standards Board, which sets U.S. accounting rules, said on Tuesday he does not expect FASB to meet a June 30, 2011 deadline for convergence with international accounting rules, requested by the G20 group of industrial and emerging countries.
The Norwalk, Connecticut-based FASB and the London-based International Accounting Standards Board expect to announce changes to their convergence work plan in the next week or so that would delay the completion date by about six months and allow for greater public comment on the boards’ proposals, FASB Chairman Robert Herz said in an interview with Reuters.
“We’ve been working on a revised work plan with the IASB,” Herz said.
“We’d all like to see the work done as expeditiously as possible, but we don’t want to sacrifice proper due process.”
While it is not uncommon for accounting rulemakers to reset deadlines during their standard-setting process, the June 2011 deadline had been discussed by the G20 several times and is seen as particularly important in potentially moving U.S. companies to international standards.
But Herz said that to issue final standards by June 2011, the boards would have to release about 10 proposals in the next two months and rush through the public comment process.
While in the past year FASB and IASB have redoubled their efforts to align key accounting rules, earlier this month the boards received letters from corporate executive groups saying they were “extremely concerned” about the quality of responses FASB and the IASB would get on more than 10 proposals for new rules by mid-2011.
While the G20 set a mid-2011 deadline for creating a single set of high-quality accounting rules, the U.S. Securities and Exchange Commission’s chief accountant has said recently that the deadline should not be met at the cost of lower-quality standards.
“The reason we go through our due process is you learn a lot from the constituent input and the letters and roundtables,” Herz said.
The two accounting rulemaking boards agreed in 2006 to focus on aligning major areas of the accounting rules, such as revenue recognition, leases, financial instrument accounting and financial statement presentation.
Herz said he would expect the boards to stagger the release of their proposals over the next seven to nine months, so they could still “get most if not all of them done by the end of 2011.”
The amount of convergence projects that the boards hope to complete are unprecedented in either board’s history. In FASB’s 38 years of existence, it has never released more than three or four proposals at a time for public comment, according to Financial Executives International, a trade organization for chief financial officers and corporate comptrollers.
The FASB and IASB were forced to divert resources in 2008 and 2009 to make changes to accounting rules related to the financial crisis, Herz said. FASB, which has about 60 professional staff members, had to devote about a third of its resources to those changes last year, Herz estimated. The IASB has a slightly smaller staff than the FASB.
The FASB released a controversial proposal last week on its financial instruments accounting proposal and is going to issue its revenue recognition proposal shortly, Herz said.
The FASB is also planning to seek public feedback in the fall about how companies should go about meeting all the new standards, Herz said.
“We recognize that once we issue the standards, there needs to be an orderly approach to putting them in place,” Herz said.
Reporting by Emily Chasan, editing by Gerald E. McCormick