The IASC met in Malaysia in April and put the finishing touches on two more of the core standards: "IAS 35, Discontinuing Operations" and "IAS 36, Impairment of Assets." It expects to complete two more, "Intangibles" and "Provisions," by its meeting in July. Financial Instruments is the twelfth and final project, and is proving to be particularly challenging. Last November IASC members rejected their own staff's proposal, with many European members calling it too "American."

Despite the delays the IASC members say they made much headway in April, reaching an agreement in principle on an Exposure Draft on Financial Instruments. Some changes were decided on at the April meeting. Once IASC Board members have seen the final draft, they will be asked to confirm by electronic ballot that the Exposure Draft can be published.

Why is this necessary?
Supporters argue that currently, financial reports involve principles and procedures that vary from country to country, leading to problems with:

1. Credibility. If a company reports different profits for its operations in different countries, its accounting could lose credibility.
2. Cost. A company may have to write separate reports for operations in different countries, which would cost them more money to prepare.
3. Uniformity. Businesses lack a uniform system for assessing financial performance in their operations in different countries. Their external reports may also be inconsistent with internal assessments if accounting standards vary from country to country.

Some U.S. experts are being more conservative in their support. They are open-minded but want to see what the final IASC proposal looks like. According to Dr. Charles Calhoun of the University of North Florida, "I think that in the spirit of uniformity and global business we need to take a look at what's developed and see if it is necessary and how it compares to what we already have."

What are the drawbacks?
The U.S. Securities and Exchange Commission has an effective veto on IOSCO and in the past has made it clear it will not settle for standards less stringent than those currently used in the United States. The SEC is concerned that if foreign companies list on U.S. markets using International Standards rather than U.S. GAAP, the result may be problematic if the International Standards are weaker.

The SEC believes that American companies could be put at a disadvantage and even undermine the stability and efficiency of U.S. markets. It could also entice U.S. companies to find ways to get around the GAAP in order to compete.

So the SEC will scrutinize the IASC's work closely; and now, there is a new player entering the picture. On May 7, Lynn Turner was appointed the new Chief Accountant of the SEC -- less than a year before the IOSCO meets to decide whether they can endorse the IASC's proposal. Turner will most likely play a critical role in the development of International Accounting Standards.

What is next?
The IASC had hoped to have completed its work on the core standards already, but it is likely that it will not be finished until November at the earliest.

Despite the delay, the IASC says it is committed to completing the core standards as soon as possible so that the IOSCO can consider its endorsement. The IOSCO should take up the issue sometime next year. If the IOSCO does give its approval the SEC would still have to decide whether to develop new reporting rules for international companies before foreign corporations could be allowed to file in the U.S. using the new international rules.

Experts say it could take until at least 2001 before that occurs, however many believe it will be worth the wait. According to Enevoldsen and Carsberg, the approval of the International Standards will "bring great benefits in the form of cost savings for preparers, auditors and users of financial statements and clearer, less confusing communication about financial matters."