The Financial Crisis Advisory Group (FCAG), the group set up jointly by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to consider financial reporting issues arising from the global financial crisis, has issued a letter to the members of the G20 reporting on the work undertaken by the group.
Addressed to UK Prime Minister Gordon Brown, as chair of the G20 nations, the letter outlines how the FCAG is helping the Boards develop their priorities in this area and promoting co-ordination among the two Boards, the international supervisory community and industry participants.
The FCAG believes that valuation and off-balance sheet standards particularly need improvement. “We are convinced that improved standards in these areas, and also in the provisioning area, which is of particular importance to regulators, can increase transparency, preserve financial statement integrity and thus contribute to reducing the financial sector’s vulnerability to excesses of the business cycle,” said the letter.
The IASB issued proposed improvements in the area of off-balance sheet items (consolidation and de-recognition standards) earlier this year and is working jointly with the FASB in this area. The FASB will issue in May improvements to the current US standards in this area. These projects follow a number of other improvements the Boards individually and together have been making over the past several months. The two Boards have provided globally consistent fair value measurement guidance for inactive markets and enhanced fair value disclosure requirements. In early May, the IASB will publish a proposal to enhance disclosures related to fair value measurement. The FASB also published, in March 2009, improvements to asset impairment guidance related to a US-specific impairment approach.
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