There are so many things going on in the standard-setting arena, it makes your head spin. And your stomach as well.
At last September's Pittsburgh meeting, the G-20 "call[ed] on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011."
Just last week, FASB chairman went the G-20 one better, vowing to "re-triple" the convergence efforts in an interview with a Bureau of National Affairs reporter. The two Boards went on issue
a joint statement by the two boards to the same effect.
Then SEC chairman Mary Schapiro issued a statement supportive of the two boards - an indirect affirmation of the convergence process. About a week earlier, chief accountant Jim Kroeker had told attendees at a CPA conference to expect a revised IFRS-in-the-US roadmap later this fall - adding that fall ends on December 21. So the convergence process is humming along, albeit behind the scenes to some degree. Maybe it will all be clearer by December 21. But a couple things still don't add up.
One: the two standard setters seem to be miles apart in their revisions of financial instruments accounting. The FASB is moving more towards transparency and fair value reporting for all financial instruments. The IASB is sacrificing its pious dedication to "principles-based" standards by concocting a stilted preservation of amortized cost accounting. It's hard to see them converging the two approaches - unless they go into "Orwellian accounting" territory whereby they somehow declare them to be equivalent.
Two: funding of the IASB. Unless all of the convergence happy talk comes down to various (Orwellian) definitions of the word "convergence", reasonable observers might expect that convergence means one set of standards, and one standard-setter. If it comes down to the IASB taking on that role, it's hard to square that with the Sarbanes-Oxley Section 109 provision that requires an independent standard setter's funding to come from the SEC. It's not clear that direct funding of the IASB by the SEC with US taxpayer money will fulfill the intention of Section 109. It's also not clear that they could exclude other, foreign parties from making contributions to the IASB's foundation - and if they did make such contributions, it would be questionable that the IASB would be an "independent" standard setter that's been appointed by the SEC.
Maybe the Section 109 conundrum is a pit stop on the road map. Or maybe Sarbanes-Oxley itself gets gutted. If the Supreme Court finds that the PCAOB is an unconstitutional entity when they hear arguments in December, it could be open season on ALL of Sarbanes-Oxley.
It gets weirder and more complex. FASB is overseen by and receives funding from the SEC through Sarbanes-Oxley - but last week, a bill passed the House that would exempt small companies - less than $75 million in market cap - from having to perform SOX 404 reviews of internal controls. The final vote could be in December. The bill includedan amendment that would insert a new regulator over the FASB. Probably the only more fast-changing time in the history of standard-setting was after Enron and Arthur Andersen imploded. Based on the facts as they appear now, it's impossible to square up the all the contradictory goings-on.