Fasb And Ifrs Standards Rules

The Financial Accounting Standards Board is the independent and private sector that establishes financial accounting and reporting standards for public, private, and not for profit organizations that follow guidelines of the Generally Accepted Accounting Principles. For example, the Security Exchange Commission (SEC) follows the standards set forth by the FASB. FASB is also recognized by the Boards of Accountancy and the American Institute of CPAs. The FASB also works with the Governmental Accounting Standards Board (GASB), The FAF Management and FAF Trustees to provide useful and informational tools to investors to better their accounting standards and ensure their financial reports are comprehended correctly. The FASB also include seven board members and advisory board.

(Horton et al., 2013) stated that the adoption of IFRS (IFRS) requires changes in the financial and accounting area, in most systems and processes, as well as in the area of human resources companies. The accounting policies in accordance with international standards are definite principles, techniques, sources, agreements and practices implemented by an enterprise in preparing and presenting financial statements IFRS IFRS-audited according to IAS and ISA-COSO internal control, putting in operation and economic good accounting for disclosure of general purpose accounting information

The Financial Accounting Standard Board (FASB) was established in 1973 to guide nongovernmental entities in the presentation and reposting of financial statements. Their mission is to “establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports” (Financial Accounting Standards Board, 2016). Throughout the years, the FASB has diligently accomplished their mission, specially by issuing Accounting Standard Updates (ASUs) that help amend the standards in those

International financial reporting standards (IFRS) are the attempt of the International Accounting Standards Board (IASB) to globally harmonize accounting standards and financial reports (Doupnik & Perera, 2014). Such standards are principles developed by the IFRS foundation and the IASB whose goal are to implement international accounting standards (IAS) which promote transparency, accountability, and efficiency of financial reporting to ensure organizations draft financial reports that are comparable internationally (IFRS Foundation, 2015). In an effort to facilitate the adoption of IFRS, accounting professional bodies worldwide such as the Institute of Chartered Accountants of Scotland (ICAS) have implemented initiatives to guide and train their members in understanding the new standards adopted within their espective country.

The Financial Accounting Standards Board (FASB) has been around since 1973 and their organization’s duty and task is to set and provide effective and reliable financial accounting standards in the United States. The Financial Accounting Standards Board is also a private sector and is a not for profit organization, also recognized as U.S. Generally Accepted Accounting Principles (GAAP). The Securities and Exchange Commission (SEC) and The American Institute of Certified Public Accountants (AICPA) recognize their standards and consider them to have authority and to be dependable. (Facts About Fasb). The Financial Accounting Standards Board’s information is heavily used by different people such as investors, lenders, auditors and many more to influence their choices about how they designate their capital. (What We Do: Fasb) It also helps the different financial markets run smoothly.

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).

United States supports IFRS standards, but does not emphasize on its full enforcement. This issue has been in debate for years. SEC has shown its immense support to meet the growing challenges of IFRS acceptance in the United States. SEC has allowed many foreign firms to form their financial statements pertaining to IFRS. Few companies have attempted towards the use of IFRS standards. SEC plays a vital role in the International Organization of Securities Commission, where companies that are operating in foreign market were recommended to implement “Thirty core” standards formed by an international accounting standard committee. In addition, SEC also supports the Norwalk agreement where both FASB and IASB commit to form a “harmonized” global standards and willingness to establish a plan to align important U.S GAAP and IFRS standards for financial reporting. (FASB website)

Accounting standard has been introduced after the World War II where every country has its own proper accounting practices such as the United States Generally Accepted Accounting Principles (the US GAAP). As time flies, international trade and foreign direct investment has experience a period of rapid growth where the companies begin to expand their business in a larger scale. Frequent international mergers and acquisitions especially by American corporations to the European companies has created the diverse accounting practices where comparing financial statements between country to another become very difficult to do. To lessen the difference and promote international harmonization in accounting practices, Sir Henry Benson, senior partner in the United Kingdom (UK) firm of Cooper Brothers & Co. led the founding of International Accounting Standards Committee (IASC) and issued the International Accounting Standard (IAS). Since 2001, the new IAS is known as International Financial Reporting Standards (IFRS) and has been issued by International Accounting Standards Board (IASB). Ball (2006) stated in his article that “the notion that uniform standards alone will produce uniform financial reporting seem naïve”. I strongly agreed with this for several reasons which I will discuss further below with real world examples.

The International Financial Reporting Standards (IFRS) - the bookkeeping standard employed by organizations in more than 110 countries has some key contrasts from the U.S. sound accounting guidelines (GAAP). At the reasonably level, IFRS is viewed as all the more of an accounting standard which is based on principles as opposed to U.S. GAAP which is viewed as a standard based on rules. IFRS, ostensibly, incorporates and displays the financial aspects of a transaction better than U.S. GAAP.

As previously mentioned, a principle-based accounting standard approach has to be developed from its conceptual framework, therefore a common framework has to be converged or shared before converging its standards. The importance of the common conceptual framework can also be referenced by its aim: “to develop an improved, common conceptual framework that builds on their existing frameworks.” (FASB, 2014)

This report will address the main features of the International Accounting Standards Board’s (IASB) Conceptual Framework (CF) by explaining the purpose and intent of these standards together with the structure of the framework. The important features of these standards will be highlighted, analysing of the significance of these and ultimately whether the CF has impacted on accounting practice.

The International Financial Reporting Standards Foundation (IFRS) and the International Accounting Standards Board (IASB) replaced the International Accounting Standards (IAS) and the International Accounting Standards Committee (IASC) in 2001. “The IFRS Foundation is the legal entity under which the IASB operates.” The objectives of the IFRS are to develop and enforce high-quality global financial reporting standards for all users of financial information. These objectives consider the requirements of a range of companies of varying categories and sizes with “diverse economic settings.” They encourage the acceptance of IFRSs by the IASB through the unification of “national accounting standards and IFRSs (Deloitte Global Services

"International Financial Reporting Standards (IFRS)" are an arrangement of international accounting norms expressing how specific sorts of exchanges and different occasions ought to be accounted for in money related explanations. "IFRS" are issued by the "International Accounting Standards Board", and they indicate precisely how "accountant" must keep up and report their records. "IFRS" were built up keeping in mind the end goal to have a typical "international language", so business and records can be comprehended from "organization to organization and nation to nation". (www.iasplus.com, n.d.)

In this assignment I want to explain the importance of the Accounting standards. As the world economy is becoming integrated and globalization is becoming a universal phenomenon, more and more businesses are getting out of the nationalistic perspective. Today one company have subsidiary companies and plants in many other countries. One of the dilemmas that

The International Accounting Standard Board (IASB) carries out the role of setting accounting standards which are used all over the country. The IASB comprises with groups of experts who drive the role with their experience background in creating the standards of accounting, auditing, preparing the financial statements and also in Academic Accounting education.