For a progress report on the rapidly developing and recently occurring changes in the global accounting standards arena, FMN Online followed Paul Volcker, newly installed chairman of the restructured International Accounting Standards Committee, to this year's FEI conference on current financial reporting standards.

 

Volcker acknowledged that "obtaining a strong global consensus on a single set of accounting standards will be very difficult. It increasingly impresses itself upon me that it is difficult because of the purely technical challenges facing the profession, but it is certainly difficult because different countries have different traditions; they have different approaches; different degrees of professional development."

 

Despite the challenges, Volcker and the IASC intend to move forward. The IASC, first constructed in 1973, has restructured with a three-prong mission: oversight of the organization, fundraising, and the selection of the International Accounting Standards Board, or IASB.

 

As a result of the new organization, members of the IASB, a newly created group, now have the responsibility for developing and implementing international accounting standards. Their work is performed under the direction of the Scottish Chairman, Sir David Tweedie, and American Vice Chairman, Thomas Jones.

 

While on one hand the IASB is expected to formulate aspirational, yet workable, accounting standards, they are also expected to gain universal acceptance of these standards. As Volcker noted, differences between countries may put a damper on the standards-setters' efficiency; however, Volcker added they also need to enforce the standards. "Standards are one thing, and as you well know, enforcement of those standards is another," he said.

 

Volcker added that he has been surprised by the United States' willingness to embrace the new approach. "I always took it for granted that the American approach was, 'Everybody else should respect GAAP. We know how to do it best.' But I think the American authorities, quite rightly, came to the view that if there was going to be a true convergence of international standards, it had to be done internationally."

 

The agenda of the IASC, according to Volcker, is "ambitious, covering virtually the whole field of accounting reporting." These include the starting point of settling the differences between American and European processes for setting forth clear standards. Other issues include fair value accounting, purchase accounting, intangibles, goodwill and stock options.

 

Volcker emphasized the energy and interest in the new effort and said, "Despite all the difficulties I've talked about, I think there is reason for some optimism."

 

Global Accounting Standards: Closer to Reality, a multimedia CPE program now available with FMN Online and FMN Video subscriptions, features Volcker's entire speech at the FEI and covers the following topics in more depth: