While the U.S. continues its debate over a possible move to IFRS, eyes have been focusing on officials in Europe. Tension escalated last year when the European Union threatened carve-outs if the IASB did not make changes to fair value rules. The IASB suspended normal due process and amended the standards.
The pressure was only beginning. French and German ministers have been vocal in their concern over the direction and speed of the IASB on fair value reforms. Although the IASB has stood firm on its timetable and just announced it will issue a revised standard in November, the IASB and FASB are not in lock step on fair value reform now, in terms of both timing and direction of proposed rule changes. There is a possibility that despite calls from world leaders to establish a single set of global standards, we could end up with two different sets of rules in the area of financial instrument recognition and measurement.
While the pressure bears down from segments in Europe, the EU Commissioner for Internal Markets has not signed the memorandum of understanding between the Monitoring Board of capital market authorities and the parent organization of the IASB. The Monitoring Board, created earlier this year, was an important step in improving the governance of the international standard setter.
FASB Chairman Robert Herz told Accountancy Age recently that European "meddling" in standard setting could derail U.S. adoption of global standards. Last month, IASB Chairman Tweedie told the European Parliament that this is the "last chance in a generation for global standards – we won't get another chance." He stressed how important European backing is to the movement toward global standards.
Do you believe Europe will ultimately accept fair value revisions and back the IASB? Do you believe that the IASB and FASB will be able to come together on accounting standards for financial instruments?