I learned today of a consortium of financial industry groups called “The Financial Instruments Reporting and Convergence Alliance” (FIRCA).  The groups who joined together to form FIRCA include: American Council of Life Insurers, Commercial Mortgage Securities Association, Council of Federal Home Loan Banks, Group of North American Insurance Enterprises, Mortgage Bankers Association, Property Casualty Insurance Association of America, Financial Services Roundtable, Real Estate Roundtable, and U.S. Chamber of Commerce. 

According to WebCPA.com, FIRCA was formed in June 2009 with the following objectives:

  • “Supporting the adoption of joint IASB-FASB international, high-quality, robust accounting standards. These standards should be decision-useful, reliable and relevant. Additionally, these standards should present financial information in a manner that is reflective of the business operations of an entity. Appropriately crafted standards should transparently provide information and not drive economic activity.
  • Assisting standard-setters in providing a wide range of input to ensure the proper consideration of business operations and potential unintended consequences in the development and implementation of accounting standards.
  • Recognizing that the financial crisis is global in scope and magnitude, to work with standard-setters and decision-makers to ensure that these projects are conducted jointly to ensure a comprehensive response to financial reporting policies.”

On Thursday, just in advance of the start of the joint FASB-IASB meeting that began today and extends through Wednesday, FIRCA issued a letter expressing concern that the FASB and IASB might fail to reach agreement about the accounting for financial instruments.  In addition to several other non-financial-instruments-related issues, the joint meeting agenda includes discussion of presentation and disclosure of instruments not measured at fair value through income, the classification of instruments with characteristics of both debt and equity, converging IASB and FASB guidance on fair value measurement, and a measurement approach for insurance contracts.  [Note that I was unable to find a copy of the actual letter and am relying on reporting done by WG&L's Accounting and Compliance Alert Checkpoint from October 23, 2009.]

FIRCA expresses concerns specifically about potential differences in the Boards’ decisions on financial-instruments issues, as well as more general concerns that disagreement about financial instruments might lead to breakdowns in efforts to converge guidance in the larger Memorandum of Understanding project list.

For those interested in accounting issues related to financial instruments as well as the general issue of convergence, this week’s joint meetings have special significance and bear close watching.

Separately, the FIRCA bears watching by anyone interested in following the continuing exchange among groups with strong interests in how financial instruments accounting is resolved by both Boards (whether separately or jointly).  Several of the constituent members of FIRCA have been regular commentators on issues such as fair-value measurement and accounting, derecognition, and consolidation issues.  It will be interesting to watch to see how this group functions and whether it has significant influence over the debate as the it continues.