Major uncertainties regarding global accounting and financial reporting standards could be resolved in 2011, says Fitch Ratings in a new report.

In particular, the rating agency believes a decision on the adoption of International Financial Reporting Standards by the United States, the goal of having a converged accounting standard on financial instruments, and the completion of major joint accounting projects by the International Accounting Standards Board and the U.S. Financial Accounting Standards Board, could all see some resolution this year.

Fitch notes that countries such as Canada, Korea, and India are expected to implement IFRS this year, but approval by the U.S. Securities and Exchange Commission remains unclear at this point. Instead of full adoption, the SEC could call for continued convergence between IFRS and US GAAP. Fitch suggests that the likely outcome is somewhere between the two options.

“The SEC’s ultimate decision is still to be determined although the momentum points more towards a compromised adoption of IFRS,” says Olu Sonola, director in Fitch’s Credit Policy Group.

The IASB and FASB have set 2011 as the year that all ‘major’ joint accounting projects must be completed. Fitch says that the completion of their five major projects by the self-imposed deadline of June 2011 seems feasible, but it adds that outcome is “highly unlikely”.

Of all the major projects the standard setters are working on, Fitch says that the most controversial and politically charged has been the financial instruments project. “In 2009, the IASB adopted a dual measurement model of amortized cost and fair value, while in 2010 the FASB proposed a fair value measurement model that generally required fair value for all financial instruments,” Fitch notes. “This was viewed by many as an obstacle to the convergence agenda of both boards.”

“Sharp criticism and other recent events point to a pull back by FASB on its 2010 proposal,” Fitch says. “The U.S. board is likely to reissue another proposal that is expected to be more in line with the dual measurement approach of the IASB.”