By Huw Jones
LONDON, Sept 16 (Reuters) - A top accounting standards setter said it has made big strides to reach a G20 goal of a single global set of rules and defended its "fair value" rule revamp despite criticisms it fails to go far enough. The International Accounting Standards Board (IASB) said in a letter to U.S. President Barack Obama, who hosts a G20 summit in Pittsburgh on Sept. 24-25, that there has been "substantial progress" on the objectives the group set in April.
These included convergence towards a single set of high-quality global accounting rules and taking steps to revamp its fair value or mark-to-market rule that forces banks to value assets at current distressed prices, sparking big writedowns.
France has already said the London-based IASB's plans don't go far enough in reducing the range of assets that have to be valued at the going rate. [ID:nL217686]
The IASB hit back in its letter, saying its emphasis has been on defining appropriate valuation methods and not "to increase or decrease arbitrarily the use of fair value."
"Whether there is a decrease or an increase of fair value will depend on a particular institution's business model and holdings," the IASB said in the letter made public on Wednesday.
The IASB also pointed out, without naming it directly, that the U.S. Financial Accounting Standards Board was considering a major widening in what comes under its fair value net, much to the anger of U.S. banks.
"The IASB is not proposing that the loan book of banks will be held at fair value," the IASB said.
CONVERGENCE CONCERNS
This week the Financial Stability Board, responsible for coordinating implementation of G20 regulatory pledges, welcomed steps being taken by FASB and IASB to "address weaknesses in existing standards".
"Members encouraged agreement on converged standards that would simplify and improve principles for valuation," the FSB said after a meeting in Paris on Tuesday.
But the Institute of International Finance, which represents banks like Citigroup, BBVA, SEB and Deutsche Bank, also wrote to Obama last week, asking for the G20 summit in Pittsburgh to accelerate convergence and iron out fair value speed-bumps.
"Recent developments suggest increasing risk of diverging views, interim standards that will need to be changed again, and inconsistent schedules for adoption," the IIF letter said.
"This is the opposite of where we should be headed, and the two leading standard setters should be asked to adopt a joint work program that minimizes the burden on issuers and confusion among users," the IIF said.
The European Banking Federation said on Wednesday there was a lack of coordination on fair value between the IASB, which sets standards used in over 100 countries, including the EU, and the FASB.
The EBF fears more assets will have to be marked to market under the IASB plan which, even so, is "more appropriate" than the FASB moves.
Inconsistency between the two boards "is putting global convergence at risk," the EBF said.
The decision by the IASB to revise the rule in chunks -- following pressure from EU finance ministers to speed up the process -- may impact on the quality of the final standard, the EBF said.
European Union leaders meet in Brussels on Thursday to hammer out a common position for the G20 summit and in their draft conclusions call on accounting rule setters to speed up work on convergence "with all G20 countries committing to implement these new standards as soon as possible."
(Reporting by Huw Jones, editing by ron Askew)