Professor John O'Hanlon and Dr Noor Hashim from the Department of Accounting and Finance received the funding from the Institute of Chartered Accountants in England and Wales (ICAEW).

The financial and banking crisis of the late 2000s prompted claims that accounting rules for recognition of loan losses were insufficiently forward-looking. It was claimed that the accounting rules had contributed to banks' failure to build up sufficient allowances for loan losses in the run-up to the crisis, and that this failure exacerbated the crisis.

In the wake of the crisis, the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) each worked towards the development of a more forward-looking method of accounting for loan losses. They tried but failed to arrive at a common approach. The failure of the two major accounting standard setters to converge on such a high-profile and material matter is controversial, and it is claimed that this will give rise to significant costs for the preparers and users of the financial statements of banks.

The ICAEW-funded study will examine the work of the FASB and the IASB on loan-loss accounting. It will focus in particular on the causes of the failure of the FASB and the IASB to arrive at a converged approach and the implications of this.