The IASB started work last year with two major short-term improvements projects. These resulted in exposure drafts in May and June 2002 of proposed changes to fourteen international standards, including a number of amendments deriving from the work of the UK Accounting Standards Board and other national standard-setters across the globe.

Questions remained in many people’s minds, however, as to differences between international standards and US Generally Accepted Accounting Principles (US GAAP). Was the American standard-setter committed to the process of global standards? Would the US securities regulator (the SEC) accept International Financial Reporting Standards? What might be the future of the SEC’s requirement for foreign registrants to provide a reconciliation of selected financial information to US GAAP?

The appointment in July of a former member of the IASB, Bob Herz, as Chairman of the US Financial Accounting Standards Board (FASB) seemed likely to provide a key to some of these questions. In recent weeks, the IASB has reached agreement with the FASB that the two organisations will together conduct a short-term project aimed at eliminating a number of detailed differences between certain IASB and US standards.

This is welcome news for all with US filings. It also brings renewed optimism for the achievement of the longer-term goal of one single global accounting language.

Of the topics for review in this 'convergence project’, a number are addressed in eight of the IASB exposure drafts from May and June. These include the two standards on financial instruments (IAS 32 and 39).

Until the ‘convergence project’ starts in earnest, it is of course impossible to predict the outcome; it seems reasonable, however, to believe that the work will bring some changes to the equivalent American standards. But it may also result in the IASB issuing further proposals for amendment to earlier exposure drafts.

The convergence project addresses additional topics as well. FASB and IASB have decided to review the international standards on construction contracts (IAS 11) and on accounting in hyperinflationary economies (IAS 29), both of which we had proposed for early UK adoption (in FREDs 24 and 28 respectively).

Also on the list are the international standards on taxes (IAS 12), pensions (IAS 19), government grants (IAS 20), interim financial reporting (IAS 34), discontinuing operations (IAS 35) and provisions (IAS 37), where the aim is to seek out and debate differences with US GAAP.

Amidst all this detailed review of existing standards, however, the real challenge for the IASB will be to find sufficient Board time to deal with the newer and critical issues in modern standard-setting - issues on which considerable work and debate is happening at national standard-setters around the globe.

Of such topics for potential new international standards, revenue recognition, insurance contracts, off balance sheet finance, outsourcing and leasing are highest on our list of priorities in the UK.