“Trying to space things out to provide bet-
ter timing is a responsible action,” maintained
Dan Noll, director of accounting standards
at the American Institute of CPAs. “Never-
theless, even with the spacing, they are still
undertaking a great challenge with the mag-
nitude and the volume of these topics to get
most of them done by the end of 2011.”
Recently, both Financial Executives In-
ternational and Big Four firm Pricewater-
houseCoopers had urged the standard-set-
ters to slow down.
PwC issued a statement expressing its
concern that even though more time has
been given for deliberation of the exposure
drafts, it’s still not enough time to produce
high-quality standards. Meanwhile, FEI’s
Committee on Corporate Reporting wrote
to both boards expressing its concern on the
“unprecedented volume of exposure drafts.”
However, FASB board member Tom Lins-
meier said during a July FASB webcast that
he doesn’t view June 2011 as a deadline, but
more as a “target completion date.”
“The timeline will be driven by what we
hear in the comments of the exposure drafts,
and one of the biggest challenges between
the two boards is whether June 2011 is a
completion date or whether it is an absolute
deadline,” Linsmeier said. “The timeline may
or may not be realistic depending on what we
get in the comments.”
After the boards released their work plan
in June, the Securities and Exchange Com-
mission issued a statement re-affirming its
belief that a single set of high-quality glob-
ally accepted accounting standards would
be beneficial to U.S. investors.
Currently, SEC staff are creating a work
Convergence
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Cloud
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downtime events, as well as status updates
when service goes down.
Other vendors targeting the accounting
community, and CPAs in particular, such as
cloud-based workflow management software
provider XCM Solutions, agreed that keeping
their customer base informed about planned,
and during unplanned, outages is the key to
customer retention.
In April, during the height of tax season,
the Boston-based company experienced an
outage for approximately 30 minutes. Al-
though a relatively short amount of time, it
was “a significant event,” according to XCM
chief executive officer Mark Albrecht. “This
was the first unscheduled downtime for us in
plan that will help the commission evaluate
the impact companies using IFRS would have
on the U.S. securities market, and plan to is-
sue a progress report in October. This plan
will consider IFRS as it exists now and after
the completion of the various convergence
projects both boards are undertaking.
GETTING PRIORITIES IN ORDER
The FASB/IASB projects were prioritized by
sharpening the focus on the areas most in
need of global improvement: financial instruments, revenue recognition, fair value
measurement and leases.
The new work plan does not include effective dates and transition methods, although
that is expected to be addressed in the third
quarter of this year.
“High on the list there are things related to
the economic crisis,” Finnegan said of how
the two boards came up with its priorities.
“The feedback that we get from the consulta-
tion process will have a significant bearing on
further progress we make.”
In a July webcast, Linsmeier and fellow
FASB board member Marc Siegel revealed
how the work plan initially called for the re-
lease of some 10 exposure drafts in June.
“The prioritized projects were not an easy
process; the individual board members on
each board have their own inclination of
which particular project is most important
in their own jurisdiction,” Siegel said, adding
that a standard addressing insurance is a high
priority for the IASB. “These projects are the
ones we believe are most important to im-
prove globally in the quickest time frame.”
While FASB issued its exposure draft in
May, the IASB has issued drafts for two parts
of a three-phase project, otherwise known as
IFRS 9, for review and comment.
Phase One addressed classification and
measurement within financial assets and
seven years. Were our clients impacted and
inconvenienced? Yes, but we handled it well.
Every company has to plan for the worst and
we do; unfortunately, one thing that caused
[the outage] was a thing you would never
have dreamed of. Communication is the
key and what we’ve done here is we have a
primary contact with our client base and we
knew of the problem in a minute so we were
able to get that message out there and get in
and fix it.”
XCM chief technology officer Gary Spauld-
ing explained that continued disaster plan-
ning is important for any cloud vendor, but
there are currently no guarantees that an
outage won’t occur.
SHIFTING STRATEGIES
Aside from priority projects, the updated
work plan also addresses projects that need
modified strategies — such as consolidation
of converged requirements for structured
investment vehicles and those relating to
investment companies; and derecognition
projects that include financial instruments
with characteristics of equity (in which the
boards developed a joint proposal based on
existing IFRS) and statement presentation.
A staff draft on financial statement presentation has already been released by FASB and
is open to additional input.
The IASB and FASB agree that the cost and
benefits involved — especially how it relates
to financial institutions — need to be analyzed. Finnegan said that it would probably
be put off because of the high cost involved
to companies’ reporting processes and systems, and that the standard requires other
changes in accounting to be adopted before
its revision.
“It either belongs in the first bucket or at
the end,” Siegel said. “We are going to engage
in proactive outreach. The goal is to complete
that outreach and issue an exposure draft at
the beginning of 2011.”
Both boards, despite their differences,
agree that they are in a unique position to cre-
ate change, which keeps them going through
the tedious process.
“All of these individuals who have been
involved in the discussions have a certain
passion for wanting to deliver a high-quality
product to the financial markets,” Finnegan
said. “There’s a very unique window to make
a difference. This is an extraordinary time in
terms of standard-setting and the challenge in
front of us. I’ve been impressed with the level
of energy among everybody involved.” AT
immediately,” he said. “You need an open
line of communication to the user base; once
the event has subsided, you understand what
happens and make sure it doesn’t repeat.”
In February, NetSuite experienced a 20-
30 minute outage that related to issues in its
cache and authentication layers, but Brown
said that this was immediately communi-
cated via its status site.
