International accounting standards convergence has taken another small step forward with the FASB's announcement on Tuesday of a request for input on the timing of new accounting and reporting standards.

Comments on the board's discussion paper on convergence timing must be in by January 31 next year, although comments on certain sections of the current convergence plan must be in sooner than that.

I see that FASB is sticking to its schedule for ending most off-balance-sheet treatment for leases, and so is the IASB. It's about time, frankly, if only to spare us poor, I mean, intrepid financial journalists from having to sort through the particulars of the current accounting treatment a moment longer than necessary.

I speak from personal experience here, having wrestled with the false distinction between capital and operating leases for a sidebar to a piece I wrote for CFO Magazine way back when. The article delved into the details of a particularly complex variation that companies were using to finance real estate, called synthetic leases.

Submitted by Caleb Newquist, republished from Going Concern, Accounting News for Accountants and CFOs.

Earlier in the week we heard the devastating news that the FASB and IASB's convergence efforts, despite a good hustle, would not meet the G20's deadline of June 2011.

When it comes to convergence of accounting standards between the US and the rest of the world, it's often one step forward, two steps back.

Last week, as part of global convergence, the Financial Accounting Standards Board and the International Accounting Standards Board released a joint proposal to change accounting and reporting of financial instruments and the statement of comprehensive income. It was the first of a series of joint proposals to come from the two boards by the third quarter of 2010, representing an important push toward global accounting convergence.

The International Accounting Standards Board is attempting to change its rule related to accounting for financial liabilities to avoid counter-intuitive results from changes in the credit risk of corporate liabilities.

When a company chooses to value its own debt instruments at fair value, the deterioration of its own credit standing, and therefore the value of its debt, causes gains to be recorded on the income statement. The vast majority of companies that use this rule are banks and the rule exists also in US GAAP.

As we reported  recently, one of the biggest concerns of IASB/FASB accounting standard convergence is the alacrity with which the IASB gave in to political pressure to ease banks’ fair value reporting standards during the financial crisis. However the IASB is now presented with the chance to quell fears and dispel the belief that it is under the thumb of the European Union – whether they will remains to be seen.

This issue comes once again to the fore as new EU internal market commissioner Michel Barnier, at a recent meeting of top accounting firms and regulators in London, inferred that future funding for the IASB could depend on its' agreeing to more involvement by EU leaders. The Financial Times reported on Sunday that Barnier said policymakers in Brussels planned to review current IASB funding – of $6.5 million – annually and that it was “premature” to think that they would increase that budget. This came after statements suggesting that the EU should be more involved in IASB governance, which left the audience stunned, according to the FT.

Our editorial partner, Going Concern, has a post up today on convergence of global accounting standards that encouraged me to take a closer look at what the SEC had to say last week, when it decided to add another year at minimum to the transition period before US companies would be required to report their results according to international rules. (Now it will be 2015 at the earliest.)

I certainly agree that convergence may be a pipe dream, but not for the reason that Adrienne Gonzalez focuses on. Yes, cost may be an issue. But from what I see in the SEC statement, what really raised the commission's eyebrows were complaints about how easily the International Accounting Standards Board caved to political pressure during the financial crisis to ease its fair value reporting rules for banks.

The Financial Times has something of an ode to accounting convergence this morning (my favorite part: "But as the G20's convergence deadline approaches, the IASB's journey gets harder. It is like a desert traveller who sees an oasis that might turn out to be a mirage.")

The article serves to highlight how much harder the financial crisis has made creating a single, global accounting standard.