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Two of the world's biggest accounting firms are reigniting the dispute over the way that banks account for losses - raising doubts over the long-awaited convergence of global reporting standards.

Jim Quigley, global head of "Big Four" accounting firm Deloitte Touche Tohmatsu has proposed that banks account for losses in two radically different ways, to meet the opposing demands of politicians and accountants.

He has told the Financial Times that he is an "advocate" of banks making loan loss provisions for "incurred losses" separately from "expected losses" - and reporting them in two different lines in their accounts.

However, PwC, the world's largest accounting firm, has previously criticised a similar proposal, saying it would "muddy the waters".

Mr Quigley's proposal comes as accountants are grappling with politicians and regulators over how banks make provision for their losses, in the wake of the financial crisis. The lack of consensus threatens agreement on a global set of accounting standards by mid 2011 - an aim of the group of 20 nations - and follows disputes over the use of fair value or mark-to-market accounting, experts say.

Politicians and regulators have blamed the current system of "incurred losses" - whereby companies may make provision for loan losses only as they occur - for exacerbating the crisis, by encouraging a cyclical approach to risk management.

But that view is questioned by many accountants and bankers who say that "incurred losses" give investors clarity. Accountants and bankers are also are sceptical about the "expected loss" model, as they fear it raises the risk of "cookie jar" accounting, whereby executives put funds aside during good years only to release them later to cover up bad performance.

Mr Quigley said he believed that "one way we can bridge some of the current conflicts in financial reporting is with transparency". "The two-line idea accomplishes that transparency objective," he told the FT. However, PwC, has said it is opposed to putting two lines in the income statement.

The debate over the use of "expected losses" centres on whether banks should judge their provisioning over a matter of months, or over the life cycle of the loan - and whether the provisions should be taken through profit and loss.