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It's time for one. (InternationalStandards).

You might not have noticed, but its happening right under your nose. For the past year the Financial Accounting Standards Board has been working in tandem with the London-based International Accounting Standards Board to bring U.S. accounting standards in line with international standards.

Current international standards were developed soon after the JASO, the IASB's predecessor, was founded in 1973. Today those standards are the norm for several countries around the world--except the United States, Japan and several European countries.

Currently, foreign registrants who use international standards are not accepted by U.S. or Japanese securities exchanges. "Every other country accepts them," says Mary Barth, IASB member and accounting professor at Stanford University. However, that is changing. If events unfold as planned, by 2005, all publicly listed companies within the European Union will conform to international standards.

"Everywhere I go around the world I hear from accountants and companies that they don't want to prepare financial statements with multiple sets of rules. It's crazy," says Barth. "Companies want [one standard]. With the increase in global investing over the years, global investors demand it. The international markets demand it."

According to Barth many differences in countries' standards are accidents of history--accidents that the IASB is working to fix.

THE IMPROVEMENTS PROJECT

In March the IASB will release an exposure draft outlining 12 improvements to the existing 41 international standards. Called the Improvements Project, the 12 proposed standards will be released with a two-year deadline to compare work. "It will be a question of who has the best answers," said IASB Chair Sir David TWeedie, at the UC Berkeley Conference on Financial Reporting last November. "It's not a question of 'winning.' The IASB just wants an international debate."

It is in CPAs' best interest to be on top of what the IASB is doing, says Barth, and to provide the board with comments. "We need input from everyone," she says, adding that the standard-setting process is analogous to FASB's.

NATIONAL STANDARD-SETTERS TO STAY

The United States has taken the lead in standard-setting. For example, Europe has no stock compensation standards, and the dot-bomb hit many European countries as hard as the United States. "International standards have equalized to FAS 133 but they are filled with compromises," said Tweedie. The IASB also is working on business combinations standards with FASB, using the same agenda papers. "We don't have to come to the same answers," says Barth, "but we are trying hard to come up with the same answers."

Barth says that the United States has led the effort in such areas and has the best set of standards and the most liquid security process. "We are the leaders," she says adding that FASB and the SEC have been very supportive of the IASB's efforts. And, it's highly unlikely that the IASB and a corresponding global policeman, would ever take the place of these national organizations. "It's hard for me to envision that there will be no need for a FASB," she says. "Each country will still have an interest in maintaining their board, they are a tremendous resource."

But will national standard-setters dig in their heels and demand that their standards be the one? Will the world end up with three standards--an IASB version, a European version and a U.S. version? "If that happens it ruins the vision," cautioned Tweedie.

"It's not U.S. GAAP vs. international standards," explains Barth. "There is a convergence effort. The IASB and FASB are working together and in some cases monitoring each others' activities. We are not in competition with them--we hope that as we tackle issues we do them together so that over time U.S. and international standards will be the same."

IT'S NOW OR NEVER

Now is a critical time for the IASB. "The rejection of the IASB could still happen," said Tweedie. "If there are no decent auditing rules worldwide, it's useless." He added that nevertheless, the convergence to an international standard is inevitable. "This is going to happen.

It has probably crept up on you unnoticed, but it is happening."

It's time to flex your influence as IASB members actively seek out countries' views to develop the global standard. As the adage goes, "think globally and act locally." Keep a watch for the improvements project exposure draft that will be posted on the IASB Web site at www.iasc.org.uk this spring. Voice your opinion and help to shape accounting standards around the world.

Deanna McCrary is a Ca/CPA editor and writer.
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Author:McCrary, Deanna
Publication:California CPA
Article Type:Brief Article
Geographic Code:1USA
Date:Jan 1, 2002
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