Conceptual Framework for Financial Accounting

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

The Financial Accounting Standards Board (FASB) is a non-profit association that designs and updates the generally accepted accounting principles (GAAPs). These rigorous accounting principles are used in the private sector during the preparation of mandatory financial reports that are given to shareholders, the public or government agencies.

 Financial accounting is an information-processing system that generates general-purpose reports of financial operations (income statement and statement of cash flows) and financial position (balance sheet) for an organization. It is used by decision makers inside and outside the firm, such as security investors, analysts, and lenders. Adding to this external orientation are external financial reporting requirements determined by law and generally accepted accounting principles.

The Financial Accounting Standards Board goes through an elaborate information gathering process before issuing their standards. Firstly, an issue is identified and placed on the Board 's agenda by the Emerging Issues Task Force. Secondly, a task force of knowledgeable persons is appointed to advise the Board on the issue. Thirdly, the Board 's technical staff investigates the issue. Fourthly, a discussion memorandum on the issue is then written and distributed to interested parties. Fifthly, the

The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy

Research: The Financial Accounting Standards Board (FASB) was founded in 1973 as a private and independent organization governed by the Securities Exchange Commission (SEC). The organization’s primary purpose is to establish the rules and standards of Generally Accepted Accounting Principles (GAAP) for the interest of the public. (“Facts about FASB”) “Since its inception in 1973, the FASB has issued 168 Statements of Financial Accounting Standards and a series of concepts statements”. (Facts about FASB, n.d.) The FASB's mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public,

A joint convergence committee created the members of (FASB) and (IASB). (IASB) is recognized as an independent accounting standard-setting body that is similar to (FASB) that joins (GAAP), and is governed by the (IFRS) foundation. Due to this convergence, (AICPA) believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world, (American Institute of CPAs, 2016). Secondly, (AICPA) is dedicated to supplying the whole accounting profession with information, tools and IFRS.com for instance to assimilate as well as implement a new set of standards. As the (AICPA) supports continual convergence of reliable accounting standards between (IFRS) and (GAAP) the mission of completion between (IASB) and (FASB) is prolonged. (AICPA) will always support funding mechanisms of the body-making

The FASB has the mission of create and improve the accounting standards and the financial reports by the nongovernmental organizations, offering useful information that allows investors and other users to make decisions. The implementation and improvement of the standards is made taking into consideration the opinion of all the parties interested and it is supervised by the Financial Accounting Foundation’s Board of Trustees. This process open to the public participation warranty the transparency into the standards-setting process. Therefore, the FASB issue a variety of reports requesting feedbacks on its standards setting activities. (FASB, Standard-setting process, n.d.)

The International Accounting Standards Board (IASB) with the objective of developing globally accepted standards establishes the International Financial Reporting Standards (IFRS). On the other hand, the Financial Accounting Standards Board (FASB) establishes the General Accepted Accounting Principles (U.S. GAAP) with the mission to improve the standards. In 2015, Hoyle, Schaefer, and Doupnik concluded, there are three key differences between the two, including recognition differences, measurement differences, and presentation and disclosure differences. Whether or not to recognize an item, how an item is recognized, or when it is recognized are the main differences regarding the recognition differences. For instance, research and development

The Financial Accounting Standards Board (FASB) was established in 1973 in order to create and develop standards of financial accounting and reporting for the general use of the public and, in particular, users of financial information including auditors, creditors and investors. This financial information is standardized for greater clarity for the guidance and education of users (FASB org, 2009a). The primary purpose of FASB as a private and non-profit organization is to develop Generally Accepted Accounting Principles (GAAP) in the United States. The FASB sets-up accounting standards for public companies in the U.S. under the mandate of the Securities and Exchange Commission (SEC). The FASB oversees the financial security; stability and

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are working together to eliminate a variety of difference between the United States generally accepted accounting procedures (U.S. GAAP or GAAP) and International Financial Reporting Standards (IFRS). This convergence project grew out of an agreement reached by the two boards in 2002 (Deloitte, 2004).

Numerous oversight organizations implement and monitor the generally accepted accounting principles, also referred to as GAAP, of their individual countries. GAAP are in place to maintain a level of consistency between the reports of individual firms, Issues arise, however when a company operates in several countries. To address these problems, the International Accounting Standards Board (IASB) developed the International Financial Reporting Standards, or IFRS.

The framework for the preparation and presentation of financial statements, also known as the framework, was approved by the board of the IASB in April, 1989. The framework was then published by the IASB in July, 1989. In the year 2001, the framework was adopted fully by IASB. The framework for the preparation and presentation of financial statements has the obligation to describe all the basic concepts that are to be adhered to in the preparation of financial statements. The framework is used by the IASB board to develop the necessary standards that are to be implemented for accounting purposes. The framework is also a guide to help in creating

This Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements for

There are a lot of purposes of an accounting conceptual framework. The main purpose of financial reporting under this accounting conceptual framework is not to help management to make decisions, or calculate taxable income and etc. (Alexander & Nobes, 2007) However, the purpose of accounting conceptual framework is act as a framework for setting accounting standards. It act as a guideline to the Board in developing accounting standards , yet is also as a guide to resolving accounting issues which is not stated directly in an International Accounting Standard or International Financial Reporting Standard or Interpretation. Besides, according to Arnold & Hope the purpose of conceptual