The international and US accounting standards bodies are both adjusting their mark-to-market rules in favour of politicians and bankers. FASB did it last month. IASB is working on it as quickly as they can. And yet, the two cannot agree on just how far they should bend over backward for the special interests.
After pressure from European Union finance ministers, the International Accounting Standards Board (IASB) has agreed to revise its fair value rule faster so it starts taking effect by year end.
“We desire to get to a common good answer with the IASB and we will make best efforts to do so, but some of the directions we are currently headed in are not to the liking of our board,” FASB chairman Bob Herz [said].
I think this boils down to the IASB wanting to delay reform of the impairment rules around financial instruments, and FASB believes any reform should include impairment changes right away. The IASB’s plans are to alter the rules around measurement and classification first before tackling the biggest issue with the standard.
I don’t think the rules need changing but if you’re going to do it anyway, you should include impairment. That being said, maybe the sluggish bureaucracy will allow cooler heads to prevail, at least for IFRS, while there’s still time.