After months of corporate scandals over accounting irregularities, the international and US standards-setters have begun a process to harmonize their rules and create a single global standard by 2005.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) held a joint meeting last week to formalize their commitment to convergence and to ask staff to choose the best standard in key areas.
The main areas the boards will first seek to harmonize financial performance reporting and business combinations accounting, as well as reclassifying short and long-term liabilities.
Reaching international agreement on the more controversial issues — such as whether or not companies should treat stock options as an expense — is unlikely to be easy, though both board chairmen pledged to support each other in the face of political or corporate opposition.
Many observers expect to see the strict rules-based approach to US accounting move towards a principles-based approach after the corporate scandals this year.
International Tax Review Week welcomes your feedback on this or any other story. Please email the author with your comments. Letters may be published online.
