The ASB's strategy for convergence of UK standards with International Financial Reporting Standards (IFRS) has generated a lot of debate and the responses from constituents have given the Board much food for thought - but no easy answers!

In March 2005, the ASB published an Exposure Draft (ED) of a Policy Statement on its future role. The ED argued that the most significant future role for the ASB would be in seeking to influence the development of high quality international accounting standards, working with the International Accounting Standards Board (IASB), the US Financial Accounting Standards Board (FASB) and other national, European and international bodies involved with standard-setting.

The responses to the ED confirmed the importance of the ASB's influencing role and identified two central issues for further consideration:

• the ASB's policy on convergence of UK standards with IFRS
• how the ASB should most effectively relate to and communicate with its UK constituents and influence EU and international matters.

On convergence, the ASB stated in the ED that it believes that there can be no case for maintaining differences between the principles underlying UK accounting standards and IFRS. In the ED, the ASB had proposed to bring UK standards into line with IFRS using a phased approach, bringing a number of standards on related topics into effect each year over a 3-4 year period. The respondents expressed a variety of views on this and - at a public meeting held in January 2006 - the ASB proposed that further changes to UK standards should be introduced with a common effective date, currently estimated to be financial years beginning on or after 1 January 2009.

At the public meeting, the convergence strategy generated a significant amount of debate. Differing views were expressed about whether full IFRS should be applied to more entities than those that are required to adopt them by the EU Regulation. Some thought large private companies should be required to report under full IFRS, others thought it was not about size but public accountability and yet others thought full IFRS should not be inflicted on those that are not legally required to adopt it. It was generally agreed that there was a case for having a simpler alternative for the smallest companies. Whether that would be IASB's IFRS for Small and Medium sized Entities (SMEs) or a FRSSE would depend on progress with the IASB's project and its outcome.

One of the key issues for the ASB in setting a workable strategy for convergence is determining where the boundaries should be between full IFRS and any simplified alternative. The ASB is continuing to discuss this issue.

The importance of influencing

On communications, the ASB has developed a strategy which reflects the fact that the Board's role has changed from only developing its own standards to one of influencing the development of IFRS. A draft of the strategy was considered at the public meeting in January 2006, where it attracted general support. A final version of the strategy has been developed and is available on the website at: http://www.frc.org.uk/documents/pagemanager/asb/ASBCommStrat.pdf

In summary, our communications strategy aims to ensure that:

• We demonstrate leadership in being well informed and setting the agenda with our standard-setting research.
• Our constituents are made aware of and kept up to date on important matters and as projects commence and progress.
• We encourage a dialogue with our constituents in real time.
• We work with and input into the processes of international, European and national bodies involved with standard setting and interpreting.
• We are open and transparent in our processes.