Convergence Between Ifrs And Usgaap

Global accounting standard setter joined hands to work in a coordinated manner to achieve the goal of creation of single set of accounting standards. Thus, IASB and FASB in response to the issues arisen due to the financial crisis started development of new set of standards. They decided to replace IAS 39 by and built and sub divided the project into three phases:

Another system that is used for the creation and presentation of financial statements is the IFRS, or International Financial Reporting Standards. This system is basically the international version of GAAP. IFRS is used in over 100 countries around the world, so it has the advantage of delivering statements that are universally consistent. This is seen as an advantage in attracting capital worldwide, especially as the financial system in general

First, The International Accounting Standards Board (IASB) issues The International Financial Reporting Standards (IFRS) on U.S securities and exchange companies listed.

The International Financial Reporting Standards, otherwise widely known as the IFRS, are a set of high quality financial reporting standards that are designed to be used globally by profit making enterprises. The continuous development of such international standards is an example of the international harmonization witnessed in the global financial sector over

The process itself was rigorous. Its aim was to assess whether the current governance arrangements promoted ‘the primary mission of the International Accounting Standards Board, (IASB), of developing high quality, understandable, enforceable and globally accepted accounting standards, and provide for both the accountability and independence of the IASB’. To achieve this, a series of proposals for governance improvements were published last year, a full consultation period ensued, responses were considered, and roundtables were held around the world.

There are two distinct methods of accounting for finances in the business world. These two methods are the methods both prescribed by the U.S., which is known as the generally accepted accounting principles (GAAP), and that which is used by the international community known as international financial reporting standards (IFRS). GAAP is regulated by the financial accounting standards board (FASB) while IFRS is regulated by the international accounting standards board (IASB). These two methods are currently under a process which is known as convergence or harmonization so that the United States will eventually become integrated into the global community (Miller, S. E. 2009). This will cause financial statements to be more usable for more people across the globe as well as enhance citizens of the U.S.’s ability to perform business more efficiently internationally.

There is no surprise that the United States is taking its precious time conforming to someone else’s standards. For years, teachers and engineers from around the world have been inquiring why the United States has not switched to the metric system in its classrooms and stop teaching the old method of measurement. After the long fight to change the standard, teachers now take time to introduce the subject in class. Mirroring the struggle to get the metric system taught in classrooms, it is now time for the United States to make a decision in the accounting profession. The International Financial Reporting Standard was supposed to be the universal standard of accounting across every nation by the year 2015, but the United States Security and

Globalization is a phenomenon that keeps increasing with a rapid pace. The effects of globalization are reflected into the world of financial reporting as well. During the last decades, the need for a single set of accounting standards around the world has risen. The idea of having mutual accounting standards has been an issue with controversial opinions. Many academics have expressed their opinion but there has been a separation between them as some of them believe that the benefits are significant and it definitely needs to happen and others believe that it is not as good as it seems. In the following essay there is going to be a discussion about the advantages and disadvantages of having a single set of accounting standards around

Accounting standards are authoritative statements intended to narrow the areas of differences and varieties in accounting practice. It is important regulatory devices of accounting. It serves as a contract template among management, creditors and investors. As companies have become more globalized, comparing financial statements has become more difficult because of different accounting rules (maxwellsci). Over 100 countries have adopted International Financial Reporting Standards (IFRS) in that matter. The accounting system in U.S. has been based on Generally Accepted Accounting Principles (GAAP) since the 1930s. In theory, switching to IFRS would make it easier to compare U.S. business to others around the world, reducing companies’ cost of capital. However, not everything changes at once (Nick). The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) have set a long-term strategic priority to achieve convergence of IFRS and U.S. GAAP into a common set of high quality global accounting standards. The convergence is to avoid conflict and confusion, promote simplicity, consistency and transparency (IFRS.org).

Since 2005, the International Accounting Standards Board (IASB) have encouraged countries to adopt a set of accounting standards that is internationally recognised in order to improve transparency between users and providers of financial reports. The understandability and interpretation are also important factors behind the driving forces of implementing such a standard.

With the globalization of international trades, it is necessary to design a common accounting language to compare the financial performance of companies from different countries. For this reason, International Accounting Standard Board (IASB) publish the International Financial Reporting Standards (IFRS) which are principle-based in order to improve the quality of financial reporting and to harmonize accounting standards in 2001.

Due to the global integration of business and finance throughout the world, approximately 113 countries have adopted or are working on convergence with IFRS. This paper is a look at the history and an examination of where IFRS stands internationally and with the United States. For several decades the industrialized world has been working toward an international set of accounting standards. Since IFRS has become the de facto international accounting language, it is logical that it will be accepted as that standard in the near future.

Accounting standard set has become debatable topics in regards its function in real business. The standards of accounting have been developed throughout years and many countries has applied different accounting standard. However, as business world has become interconnected, there is an urged in need to have one stand-alone of accounting standards that could use worldwide. Therefore, many countries developed convergence of their accounting standard into International Financial reporting standard (IFRS) by International Accounting Standard Boards (IASB). According to Barth et al (2008) International Accounting Standards Committee (IASC) and the next follower the International Accounting Standards Board (IASB) have a goal to develop an International standard of High quality financial reporting standards. The standard is become important in regards to financial statement users that should enhance the transparency and integrity of each account in the statement. The transparency and integrity have crucial roles towards the effectiveness of capital markets functions, allocation of capital efficiency, and global financial stability and economic growth stability (IASB, 2013).

For many years, countries have created their own accounting standards which was either rules based, principle based, tax oriented, business based, etc which as a result, made them all different. There eventually came a need for harmonization since the world was undergoing globalization. As we approached the late 1990’s, we saw two predominant standards which was GAAP and IFRS. It is now clear that the world is moving to a more

The International Accounting Standards Board (IASB) is an independent body which approves and develops International Financial Reporting Standards (IFRS). They work under the oversight of the IFRS. The IASB was formed back in 2001 to replace the International Accounting Standards Committee. (www.iasplus.com,2015)