GLOBAL - The International Accounting Standards Board (IASB) and US Financial Accounting Standard Board (FASB) have updated their Memorandum of Understanding (MoU) concerning joint projects and likely convergence, and effectively confirmed the US' move to follow international financial reporting standards (IFRS).

The developments are not a huge change for the European pensions market at this stage as it was widely understood the FASB had been working with the IASB on several projects, including convergence of US GAAP with IFRS, since 2006 to ensure their requirements on corporate accounts reporting broadly matched those of the international standards.

This is also in part because the FASB was known to be under pressure from the Securities and Exchange Commissions (SEC) to move one way or the other, as IASB officials acknowledge: "The boards are also aware that continued progress toward convergence is a factor that the US Securities and Exchange Commission (SEC) will consider in evaluating its recent proposal to permit or require use of IFRSs in the US."

However, this statement has also been released in part because other countries - namely Canada, India, Korea and Japan - are now looking to adopt or converge with IFRS from 2011, according to the IASB chairman Sir David Tweedie.

The new MoU explained it still has several hurdles to overcome to ensure the convergence is completed by 2011, as previously stated in 2006, along with 11 joint projects, including one on pensions accounting, officially known as "post-retirement benefits (including pensions).

The FASB has completed one part of the FASB-defined review, according to a statement issued today, while the IASB is still working through its part of the project, as the consultation on the discussion paper launched in March this year is only due to close at the end of this month.

The IASB said it will then publish the exposure draft paper on pensions accounting in 2009, once it has considered all of the comments made.

IPE has obtained information suggesting in order to achieve all of the FASB/IASB goals for convergence by 2011, the organisation will have to publish a discussion or exposure paper every 22.1 days until the target date to meet that timetable.

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