Today, Gerrit Zalm, Chairman of the Trustees of the IASC Foundation, the oversight body of the International Accounting Standards Board (“IASB”), issued a letter to President Bush, to be circulated to participants prior to the G-20 summit in Washington D.C. this weekend.

The letter notes that International Financial Reporting Standards (“IFRS”) are applied in more than 100 countries, and that “[m]ost of the world’s developed and emerging economies – including nearly all of the G20 members - have made commitments” to adopt IFRS in the near future. The letter emphasized “the need for a global response to the credit crisis” and highlighted the importance of the IASB, the independent body that issues IFRS, and its role “in addressing issues emanating from the credit crisis.”

The letter implicitly acknowledges that fair value or mark-to-market accounting rules have been singled out by many as having had a destabilizing effect in the current crisis, arguably magnifying the effects of illiquid credit markets on market values and triggering significant asset write-downs and associated capital charges at financial institutions around the globe. IASB and the Financial Accounting Standards Board (“FASB”) have convened a series of roundtable discussions to “identify financial reporting issues highlighted by the global financial crisis,” with the first roundtable taking place in London on Friday, November 14, 2008 and two more taking place later this year. The IASB letter cautions that “any steps taken outside the well-established and supported standard-setting process to amend fair value accounting would further undermine already scare confidence in financial markets. Therefore, efforts to improve financial reporting should be led and completed expeditiously by the IASB in order to ensure a globally coordinate approach.”

The letter also outlined two other IASB initiatives adopted in response to the credit crisis. The first initiative is designed to address “procyclicality though urgent and focused dialogue between accounting standard-setters and prudential supervisors,” while the second initiative envisions the creation of “a high level advisory group” that will “consider how improvements in financial reporting could help enhance investor confidence in financial markets.”