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When the going got tough, the IASB punted

" ... the IASB has now shown it is not ready to be the premier accounting standard setter in the world. The IASB amended its rules slightly to align them with US practice by allowing an exception to fair value reporting. It did so because of political pressure.

The threat it faced was that if it had not, the European Union, which follows the IASB’s rules, would have acted itself. This would have likely resulted in worse accounting rules and would almost certainly have finished the IASB’s dream of the US switching to IFRS, since the US has made it clear it will not tolerate other countries carving out chunks of the rules where they choose.

But I believe the IASB has ended that dream of US convergence itself by bowing to political pressure. The amendment was done without due process: no comments or discussion were sought from investors. Incredibly, that suspension of due process bore the blessing of the trustees who oversee the IASB. Seeking convergence on a tiny part of the rules in this regard may seem trivial, but it is a giant step backwards. It shows that when the going got tough, the IASB waived the interests of those – the users of accounts – whom it’s supposed to serve. Instead of converging to what is best in US standards, the IASB is adopting some of the worst features.

The IASB is defining convergence downward: it is adopting an exception built into the US standard, something for which the US system is often criticised – and it is an exception bound to lead to less transparent reporting to investors. This is not what convergence is supposed to bring about. ... "

Jack Ciesielski Publisher of the Analyst’s Accounting Observer Published in the Financial Times

Bowing to political pressure: “If the regulators and standard setters do not act now to improve the standards, then the Congress will have no other option than to act itself,” Representative Paul Kanjorski speeking to Bob Hertz. the FASB is rushing through Staff Position FAS 157-e and Staff Position FAS 115-a, FAS 124-a, and EITF 99-20-b to "improve" fair value accounting and keep congress happy. How long before the EU pressures the IASB into joining this race to the bottom, is something we will have to wait and see.

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