Latin American Capital Markets

224 PIETRO MASCI AND IVAN SOTOMAYORrequired for determining earnings per share, as is the case in determining the impactof different types of contingencies related to contingent issuable shares. Consequently,there may be different results in the calculation of earnings per share between entitiesfollowing IAS 33 and FASB 128.Fourth, the difference in reported results between IAS and U.S. GAAP maybe even more difficult to compare as more countries adopt IAS as their national standard.The lack of consistency in the application and enforcement of the standard insome jurisdictions will make it difficult to compare an lAS-based financial statementof an entity in Germany with a comparable lAS-based financial statement of an entityin Japan and, clearly, almost impossible to compare with a U.S. GAAP-based financialstatement.AgendasAt the top of lASB's agenda is the Improvements Project, which was undertaken followinga request from the International Organization of Securities Commissions(IOSCO), the European Commission, and national standards setters such as FASBand includes several changes, both large and small, in 14 international standards.Thepurpose is to eliminate alternatives, redundancies, and conflicts in existing standardsand align IAS with U.S. GAAP in areas such as accounting for foreign exchange andinvestment in subsidiaries that are not consolidated. In other areas, a dramatic divergencecontinues to exist in standards such as the last in, first out inventory method,which is allowed under U.S. GAAP but not under IAS.The Improvements Project has also eliminated extraordinary items. Althoughin appearance this area seems to have significant differences between U.S. GAAP andIAS, in reality, the differences are minimal because not many transactions are treatedas extraordinary items. In the United States, reporting an extraordinary item has becomean ordinary occurrence. FASB did not totally eliminate this category, but insteaddecided to rescind one of the principal sources of extraordinary items, that is, theearly extinguishment of debt. When FAS 4 Reporting Gains and Losses from Extinguishmentof Debt was issued, it constituted an extraordinary item. Now, with all theinnovations in the financial market, most companies have greater flexibility on how toretire their debt, and it is not considered an extraordinary item.After debate among various stakeholders, FASB eliminated the standard thatallowed use of the pooling-of-interest method for business combinations effectivewith acquisitions in 2001.The IASB also has a project on its agenda to do the samein 2002.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub