Response to FASB Exposure Draft: Accounting Changes and Error Correction

In December 2003, the Financial Accounting Standards Board (FASB) issued an Exposure Draft, Accounting Changes and Error Corrections - a Replacement of APB Opinion No. 20 and FASB Statement No. 3 (the ED), as part of its short-term convergence project with the International Accounting Standards Board (IASB). This article summarizes the Committee's letter. Comments in this article reflect the views of the individuals on the Committee and not those of the American Accounting Association. It is believed that it is important to maintain differences between U.S. GAAP and IFRS when convergence to a common set of financial reporting standards reduces either the relevance or reliability of financial statements or disclosures without compensatory improvements on the other dimension. The Committee agrees that the ED will likely result in more comparable financial information across firms internationally because the treatment of changes in accounting methods and estimates will be the same under U.S. GAAP and IFRS.