International Accounting Standards Board And Financial Accounting

The International Accounting Standards Board (IASB) was formed in an attempt to bring uniform accounting standards within international countries through its issuing of the International Financial Reporting Standards (IFRS). Today, over 100 countries including Canada, India, and Japan have adopted these standards for financial reporting. The growth of multinational companies such as Coca Cola and the increasing desire of cross-border investing have made it apparent that the U.S.accounting standards known as the Generally Accepted Accounting Principles (GAAP) issued by the Financial Accounting Standards Board (FASB) can no longer remain separate from IFRS. Under the request of the Securities and

As stated earlier, the IASB arose from specific needs of the accounting industry and the public. As international trade has increased, the need for transnational accounting information has increased as well. This sparked the demand for development of international accounting standards to make financial data between countries more comparable. In 1973, the International Accounting Standards Committee (IASC) was formed to develop these international standards. The standards issued by the IASC, prior to 2001, were called International Accounting Standards (IASs). In 2001, the IASC made the International Accounting Standards Board (IASB) the official international standard-setting body. The standards issued by the IASB are called International Financial Reporting Standards (IFRSs) (Schroeder, Clark, & Cathey, 2011, p. 82-87).

Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting

The convergence of two accounting systems, the US GAAP and International Financial Reporting Standards, is not a new concept. For many years, the primordial idea of convergence started in the late 1950’s in response to post World War II economic integration and related increases in cross-border capital flows. Initially, the term used was “Harmonization until the early 1990’s the politically correct term is “Convergence”.

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-IASB convergence project sought to merge U.S. GAAP with IFRS in a way that would combine the best of both standards to make financial reporting easier in a world that grows smaller each day. To say that the project was challenging would be a gross understatement; convergence faced many setbacks that arose out of disagreements about the best way to represent information for a vast set of users. One reason why disagreements arose is because the process for accounting standard-setting is considerably political. When a diverse group of people argues for the interests of massive groups of other very different people, each with their own competing interests, complications are bound to occur. Everyone brings their own issues to the table,

For nearly half a century, a movement has been underway to establish a high-quality, comprehensive set of international accounting standards, with the goal of facilitating international trade and investment. In the global capital market, differences in the rules of accounting for the purposes of recognition, measurement, and reporting of financial results have impaired the smooth transfer of information across borders. Given that it accounts for nearly a third of the global market, there is considerable pressure for the United States to conform to the International Financial Reporting Standards (IFRS), as promulgated by the International Accounting Standards Board (IASB). While moving to a single set of accounting standards could create

On November 18, 2002 the FASB and IASB came together at a meeting in Norwalk, Connecticut to start the wheels in motion for the purpose of establishing a new set of financial standards. The FASB and IASB are committed to create financial standards that will be accepted both domestically and internationally that are of high quality and compatible for financial reporting. At present more than a 100 countries already use the International Financial Reporting Standards. The U.S. at present has not accepted a changed in accounting procedures; therefore, this is going to be a major task for both the FASB and IASB to complete successfully this union. I do believe that the partnership between the FASB and IASB will achieve the goals of creating a common financial reporting set of standards that will be accepted by all.

The ASAF is made up of representatives of both national and regional standard setters, and it serves as a check to the IASB to "ensure that a broad range of national and regional input on major technical issues... are discussed and considered." They also provide a background to "facilitate effective technical discussions on standard-setting issues" which may involve the IASB both directly and indirectly. The Financial Accounting Foundation (FAF), which parents FASB, helped carve a path for FASB to join the ASAF despite its refusal to adopt IFRS as its sole accounting standard, and they continue to use their influence to ensure that FASB keeps its presence. During the quarterly ASAF meetings, FASB keeps the other members updated on U.S. GAAP developments as well as IFRS usage in our country (through foreign private

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 Convergence Project between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), started to make way in October 2002 when the Norwalk Agreement publicized the merging of both sets of standards. The Norwalk Agreement is a signed understanding by both FASB and IASB to ensure the compatibility of financial standards and future programs. These two committees, along with the Securities and Exchange Commission (SEC), have been working together to improve the accounting standards of GAAP and IFRS. “The IFRS includes most European countries, Canada, Mexico, China, and Russia”, (Waybright p.259), while GAAP is only used in the U.S. The Norwalk Agreement pledged to

The Norwalk Agreement, first announced on September of 2002, was a paramount step towards a unified global accounting standard. In this document, both U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Boards (IASB) (the Boards) “each acknowledge their commitments to the development of high quality, compatible accounting standards that could be used for both domestic and cross-border financial reporting.” (MoU Progress Report, 2008) In 2006, and subsequently updated in 2008, the boards agreed on a Memorandum of Understanding (MoU) which detailed the short and long-term

In mainly everything, sports, class rooms, or work places you have a set of rules to go by. In the accounting world, you must also follow a set of rules and standards. The Generally Accepted Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS). Most countries around the world use IFRS while the United States uses GAAP. International Financial Reporting Standards and Generally Accepted Accounting Principles do things differently. Each country’s government sets which principles the accountants will use. There are also organizations that have been formed to help with all the confusion between countries. The organizations are called Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). FASB is the organization that has been designed by the US government to establish GAAP in the United States. IASB is the international organization developing and promoting accounting standards to be used throughout 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.

The International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) have been working on convergence of U.S. GAAP and IFRS since 2002, but it has been a challenging process on combining the standards between U.S. GAAP and IFRS, especially when there are two set of approaches on standards, where U.S. GAAP is rules-based and IFRS is principles-based. The U.S. GAAP is rules-based by following a set of guidelines opposed to IFRS, is principles-based by having an objectives of good reporting and provides the best judgement on the guidance to a specific circumstance. It takes a lot of effort to converge accounting standards between U.S. GAAP and IFRS, such as training personnel on the new policies and procedures, updating the accounting policies, improving a new information system, and updating internal control procedures, which you can see the reason American companies is reluctant on this transition. Just like any new updates in standards, it has its issue and difficulty as in the cost of transition, the resources to make the changes, and a period where financial reporting will be unable to have the comparability for financial statement users. Bottom line, transition is a messy process and have its complexity.