The nation's top accounting regulator told banking supervisors Tuesday they are free to apply their own judgments to bank financial statements.

"It may not be possible [for accountants and bank examiners] to find common ground in every case, not because we aren't communicating, but because our different missions take us down different roads," Robert Herz, the chairman of the Financial Accounting Standards Board (FASB), said in a speech to the American Institute of Certified Public Accountants. "[Bank] regulators should have the authority and appropriate flexibility they need to effectively regulate the banking system."

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