FASB, IASB.

The chairman of the Financial Accounting Standards Board (FASB) has become a regular presenter at FEI's annual conference on Current Financial Reporting Issues (CFRI), and Robert H. Herz took the occasion to provide an update of FASB projects in progress and to respond to queries from the audience. Herz's remarks came at the ninth annual CFRI event at the New York Hilton on November 8-9.

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Herz described the Conceptual Framework project with the International Accounting Standards Board (IASB) and efforts to facilitate convergence, noting that FASB is committing "significant resources" to the project.

Among the FASB projects getting much attention, Herz discussed:

* Revenue Recognition. (This represents the biggest single item on financial statements). Herz said this project is "extremely challenging," and a lot of thought is going into it. He noted that the objective is to replace 180-plus pieces of existing guidance, and that a Preliminary Views document--not an Exposure Draft--should be available in late 2005.

* Share-based Payments. Over 13,000 letters were received by FASB on the subject, with 5,000 letters from primarily technology companies opposing the Exposure Draft, 6,000 from investors favoring it and about 200-300 detailed letters, Herz reported. With the deliberations "substantially complete," certain decisions were affirmed and others modified. A final statement is expected this month; it will be effective for public companies for the period beginning after June 15, 2005.

Herz also noted he's hopeful that more and more companies will use new technology to improve disclosure. For example, in discussing eXtensible Reporting Language (XBRL), he said he can foresee a different world for financial reporting, which can be streamlined, enhanced and rationalized, to meet different user needs for disclosure.

Anthony T. Cope, CFA, a board member of the International Accounting Standards Board (IASB) provided a general IASB update. He spoke of the International Accounting Standards (IAS) to take effect beginning in January 2005, saying, "IAS are a fact, and we are going to live with convergence [with the U.S.]." He noted that the process itself is "raising all the posts [by] trying to bring all up to a higher standard [rather than] searching for a common denominator."

On convergence, he said that through a combination of joint projects, both IASB and FASB are working to reduce differences and increase the quality of accounting standards through both short- and longer-term agendas. Some of the short-term standards include: income taxes, borrowing costs, joint ventures, R & D and segment reporting. Long-term projects include pensions and intangibles.

As Cope noted, convergence projects are truly universal. The project related to principles surrounding disclosure is being run by Canada's accounting board, and the MD & A project is led by New Zealand's accounting board. Other IASB-only projects include insurance, financial risk disclosures and SMEs (small and midsized entities).