The primary communiqué released at the end of a summit held in London on April 2 said the G-20 would “call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards.”
The group also issued a declaration that expands the Financial Stability Forum to become the Financial Stability Board, which will have broad authority to review and advise financial regulators and standard-setting bodies. The declaration details several recommendations for accounting standard setters including several actions that it says should be taken by the end of 2009.
A March 14 status report on the G-20’s action plan shows that FASB and the International Accounting Standards Board (IASB) have been active since the action plan was first unveiled in November. Just before the summit in London, the IASB further detailed its progress on the G-20 recommendations in an overview of measures undertaken by the International Accounting Standards Committee Foundation with the IASB responding to the conclusions reached by the G-20 at its summit in Washington.
The G-20’s members are the finance ministers and central bank governors of 19 of the world’s most significant industrial and emerging economies, and the European Union, which is represented by the rotating Council presidency and the European Central Bank.
For more information, visit www.g20.org.
The IASB published an exposure draft of proposals to improve the derecognition requirements for financial instruments.
The IASB is also proposing to enhance disclosure requirements, especially in situations where an entity continues to have an ongoing involvement in a financial asset that would be derecognized under the proposals. The additional disclosures would allow users to make a better assessment of the risks associated with such an asset.
The proposals are part of the IASB’s comprehensive review of off-balancesheet activities and follow the publication of proposals in December 2008 to strengthen and improve the requirements for identifying which entities a company controls, known as consolidation.
The IASB says its comprehensive review of off-balance-sheet risk is in response to concerns raised by the G-20 leaders at their meeting in Washington in November. The IASB and FASB have announced their intention for these proposals to become joint projects.
Comments are due by July 31. The ED is available under “Open for Comment” at www.iasb.org.
The IASB also released an exposure draft for a proposed new standard on accounting for income tax. If adopted, the standard would replace the existing requirements in International Accounting Standard no. 12 (IAS 12), Income Taxes.
The proposed standard retains the basic approach to accounting for income tax, known as the temporary difference approach. The objective of that approach is to recognize now the future tax consequences of past events and transactions, rather than waiting until the tax is payable. Although the proposed standard retains the same principle, it removes most of the exceptions in IAS 12 to simplify the accounting and strengthen the principle in the standard. In addition, the ED proposes a new structure for the standard intended to make it easier to use.
Comments are due on the ED by July 31. It is available under “Open for Comment” at www.iasb.org.