by Melissa Klein Aguilar

U.S. and international accounting standard setters are still hashing out their differences with hopes of reaching a converged standard on accounting for financial instruments, according to officials speaking at a financial reporting conference this week.

While their current approaches differ markedly, with the United States supporting more use of fair value, leaders of the Financial Accounting Standards Board and the International Accounting Standards Board said they’re continuing to work toward a converged answer.

“We’re going to expose our views, and hopefully … reconcile those differences to arrive at a comparable solution,” Russell Golden, FASB Technical Director, said during a panel discussion at a conference sponsored by Financial Executives International. “What that might mean is that both numbers—both costs and fair value—are relevant and both may be presented on statement of performance as well as the statement of financial position, or maybe that a comparable solution will be arrived at though disclosure.”

IASB released its revised financial instruments standard, IFRS 9, last week, notably without the endorsement of the European Commission.

“In some respects I consider that a silver lining in that it will allow us to work closely with FASB and finish this time next year with a standard that’s more likely to be … more converged,” IASB member Patrick Finnegan told reporters during a press Q&A.

Finnegan said the EC’s concern relates to the classification conditions in the standard for determining whether an instrument is eligible for using fair value or amortized cost.

“That’s something they want the board to continue focusing on,” he said. “They also want to have the benefit of seeing the three phrases of the project finished and evaluate the standards as a package.”During the panel discussion, Finnegan said based on what he heard while gathering feedback on IFRS 9, “It’s clear to me from talking to people … in Asia and Europe that they want see a single standard … the same words with respect to accounting for financial instruments, particularly as it applies to banks. “

Asked later about the likelihood of a converged answer, FASB Chairman Robert Herz told reporters, “I’ve found that in standard setting, you never know where you’re going until you completely get there and go through the process.”

Finnegan said he’s supportive of having both fair value and amortized costs presented on the balance sheet.

“It’s my personal view that one measurement attribute can’t have primacy over the other in terms of information that’s provided to users,” he said. “If you’re going to measure financial instruments using amortized costs, other users may feel fair value is more decision-useful. That should be made available to them and it shouldn’t be somewhere where they have to go hunt for it.”

Finnegan said he’s “optimistic that will be an element of the converged solution.”

“I don’t think ultimately it’s a very challenging thing to implement,” he said. However, he said an objection he’s heard to the idea heard is “a belief that by displaying fair value prominently, you create unnecessary volatility.”

However, he refuted that objection, saying, “That’s the reality. Financial instruments fluctuate … and to hide that information isn’t serving anybody’s needs.”

The two boards published an updated version of their Memorandum of Understanding this month in response to calls from the G-20 to redouble their convergence efforts. Under the agreement, Golden noted that the two boards have agreed to meet monthly.

It was “inefficient” for both boards to meet separately and conclude and then reconcile their differences, he said. Particularly on controversial issues, he said the boards will meet face-to-face so their respective members can understand what each board is thinking.

“In times past, one board has leap frogged the other,” he said. “We agreed that the leading board will reconsider its conclusions as the lagging board gets up to speed.”

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