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U.S. urged to bridge accounting body cash gap

Hans Hoogervorst, chairman of the Netherlands' Authority for the Financial Markets, speaks at the International Organization of Securities C
Hans Hoogervorst, chairman of the Netherlands' Authority for the Financial Markets, speaks at the International Organization of Securities C

By Huw Jones

LONDON (Reuters) - The international accounting body working to beef up company audit rules says it is running short of money and wants the United States to stump up more cash to help it complete its reforms.

The Group of 20 economies (G20) want to make it easier to spot risks on bank balance sheets to avoid taxpayers again having to bail out lenders as they did in the financial crisis.

The International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) have been trying for years to end disagreements on how to "converge" or align their differing rules.

But the IASB says a scaling back in contributions from U.S. companies which doubt American companies will ever adopt international standards has led to a cash crunch.

It says it has delayed hires which risks harming its work as G20 leaders pile on pressure to complete alignment quickly.

"We really need to have money in our bank account," IASB Chairman Hans Hoogervorst told a meeting of its Monitoring Board.

The IASB spent 21.3 million pounds in 2012 when the world's top economy and G20 member contributed 1.2 million pounds, down from the 3.1 million pounds expected. It is set to drop to 1 million pounds this year.

"We are committed to working with everyone to solve the funding shortfall and really come up with something," Elisse Walter of the U.S. Securities and Exchange Commission, told Reuters on the sidelines of the Monitoring Board meeting.

She was the chairman of the SEC until her successor, Mary Jo White, was sworn in on Wednesday.

The IASB faces a funding gap of 1.4 million pounds this year, rising to 1.8 million in 2014, and 2.2 million in 2015, partly because of lower contributions from the United States.

"I think there is a commitment in the U.S. and I do think people are serious about moving forward... but it can't come from a governmental level as we don't' have a budget to do that," Walter said.

CAP IN HAND

Michel Prada, chairman of the IASB's trustees, will ask for the "Big Four" accountants - KPMG, Ernst & Young, PwC and Deloitte - to increase their total contribution of 6 million pounds last year.

"We are in a situation which is not very good, to be frank. We have a funding gap, we have limited resources and therefore limited capacity," Prada told the Monitoring Board meeting.

He also wants countries to contribute relative to their economic size, meaning U.S. contributions jumping to 4.3 million pounds in 2015.

The drop in money from American companies is blamed on U.S. reluctance to adopt IASB rules known as IFRS and used in over 100 countries once the convergence work is completed.

"There is no consensus in the United States on adopting IFRS and I don't see this happening for several years," Ed Nusbaum, CEO of Grant Thornton International accounting firm and member of the U.S. FASB's oversight foundation, told Reuters.

"The investor groups are not united over adoption and some corporates are reducing their contributions commitments to the IASB because there is no sign of the United States adopting IFRS," Nusbaum added.

Walter said moving to IASB rules was an "on-going project".

(Editing by David Cowell)

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