The International Accounting Standards Board

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.

In May 2008, the AICPA’s Governing Council designated the International Accounting Standards Board (IASB) as the body authorized to establish international financial accounting and reporting principles under rule 202 and 203 of the AICPA Code of Professional Conduct. Below is an illustrative Independent Auditor’s Report on financial statements issued in conformity with IFRS.

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

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.

A formal document issued by the Financial Accounting Standards Board (FASB), which details accounting standards and

The International Accounting Standards Board (IASB) began operations in 2001. It is an organization committed to developing, in the public interest, a single set of high quality, global accounting standards that require transparent and comparable information in general purpose financial statements. The IASB has developed procedures that bring transparency, predictability, and consistency (IASCF Press Release, December 2, 2007).

The Financial Accounting Standards Board (FASB) is the body in the U.S. that sets the accounting standards. These standards issued are referred to as the Generally Accepted Accounting Principles. FASB has an Accounting Standards Codification (ASC), which is a source of seeing nongovernmental US GAAP. FASB provides a Codification research system website, which can be utilized by accountants, lawyers, and students as a means to view content, perform research, and submit feedback. The goal of the Codification was to give accurate up-to-date standard-setting activity in one spot while being user-friendly by codifying all US GAAP. According to the FASB official website, “…the Codification is expected to: 1. Reduce the amount of time and effort required to solve an accounting research issue 2. Mitigate the risk of noncompliance through improved usability of the literature 3. Provide accurate information with real-time updates as Accounting Standards Updates are released 4. Assist the FASB with the research and convergence efforts (About the Codification v4.10 https://asc.fasb.org/help&cid=1176163588636).”

The IASB and FASB have been working on a project together to minimize the differences in the way financial statements are presented to the public. Some of the major changes that we will notice in the statements are the adoption of the International standards. The information portrayed will be the same with some changes in the organization of the data. The changes are said to bring more understanding to the interpretability of financial statements as a whole.

The IFRS are the standards, interpretations and the framework adopted and developed by the International Accounting Standards Board (IASB) (Freeman, 2014). These set of ac-counting standards would improve comparability of financial information as well as the flow and pricing of capital (Epstein at al 2009). IFRS is becoming the global standard for the prep-aration of company financial statements (Freeman, 2014). International compatible financial statements assist in lending decisions, loan monitoring, and establish international vendor credit and development of other international business relationship (Evans, et al.., 2005).

In September of 2006, The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157: Fair Value Measurements ("FAS 157") to provide guidance about how entities should determine fair value estimations for financial reporting purposes. These guidelines coincide with the conceptual framework and provide a baseline for accounting professionals to gauge the true worth of an asset. The goal of the conceptual framework to provide clear concise information across the accounting profession. It allows regulators to provide a uniform standard to individuals and companies, as well as providing a platform to roll out future account developments in the field. However, despite the best efforts of regulators, there is always bumps on the road to providing a smooth and compliant framework for accountants.

The IASC Board approved the IASB (International Accounting Standards Board) Framework ( in April 1989) which was a successor of the IASC Board, and it accepted its Framework in April 2001 (Wells, 2011). International standards are developed by IASB which are named International Financial Reporting Standards (IFRS). Although IASB took the place of IASC with its accounting standards, its IAS (International Accounting Standards) was enforced by IASB and available into practice until now. The conceptual framework is helpful when it is used to develop the setting of International accounting standards. First of all, the definition of conceptual framework provided by Melville (2014, p. 17)[ Melville, A. (2014). International Financial Reporting.(4th ed.). Edinburgh Gate:

“…describes the objective of, and the concepts for, general purpose financial reporting. It is a practical tool that: (a) assists the International Accounting Standards Board (IASB) to develop Standards that are based on consistent concepts; (b) assists preparers to develop consistent accounting policies

“The Objective of the Conceptual framework project is to improve financial reporting by providing a more complete, clear and update set of concepts” (IFRS.org). Although the current framework has been crucial in to the IASB when developing and revising IFRS’s there have been a few problems. There are areas that are uncovered, limited guidance and out of date areas. In July 2013 the IASB issued a discussion paper which is designed to explore potential changes to the IASB’c conceptual framework and the possibility of a revised framework. “The Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements“ (JULY 2013). This discussion document is the first step to a revised