The Relationship Between Fasb and Iasb

In September 2002 the IASB and the FASB agreed to work together, in consultation with other national and regional bodies, to remove the differences between international standards and US GAAP. (Dorata, 2008) However, the convergence of IFRS and FASB is coming to the end. (Golden, 2013)

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,

Even at its best, the convergence project didn’t account for all of the subtleties that would bring its demise. According to an article by Ken Tysiac of the Journal of Accountancy, the project formally ended in January 2013 when a joint meeting between FASB and the IASB resulted in an announcement to continue increasing global comparability in different ways. Now, FASB continues to strive for increased comparability among foreign standards to U.S. GAAP. The FASB's strategy for doing so involves three methods. Firstly, FASB aims to develop high quality standards for others to follow. In doing so, FASB intends to serve "as a reference point and benchmark for others... [and] lead by setting an example of excellence." Secondly, FASB works

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).

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:

With the number of countries that have switched to the International Financial Reporting Standards (IFRS) for their financial reporting, as well as the continued efforts made between the IFRS and US Generally Accepted Accounting Principles (US GAAP), it is evident that international convergence is an overall appealing idea for global reporting. With that said, US GAAP has worked with IFRS to create a universal standard; and while progress has been made to diminish variances between the standards, there are still large, if not unattainable, efforts ahead of us. The hype over a proposed uniform set of global accounting standards appears to be stunted by the lost efforts in the convergence project between the US GAAP and IFRS. As the Financial Accounting Standards Board (FASB) moves forward with its standards setting, there must be a reevaluation of the goal for reporting standards and efforts with the International Accounting Standards Board (IASB).

In 1973, the private sector International Accounting Standards Board (IASB) was formed. The IASB is a natural extension of a global market that has been evolving over the last three decades. The IASB formulates and publishes accounting standards to be observed when presenting financial statements and promote their global acceptance. As an overarching mission, the IASB works to improve and harmonize accounting standards, regulations, and procedures as it relates to financial statements. IASB standards provide a reference model and set of examples for financial reporting in developing countries. The IASB has no authority with the Financial Accounting Standards Board (FASB) or the Securities and

For the past ten years, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have

The International Accounting Standards Boards (IASB) and the Financial Accounting Standards Board (FASB) are making an effort to converge to develop International Financial Reporting Standards (IFRS) by gathering accounting standards that can be used in financial reporting whether it is in the home country or in the host country. Both the International Accounting Standards Board and the US FASB have proven to be vital promoters of the globalization of international financial accounting standards (Kirsch, 2012). These efforts have focused on a cohesive setting that will eliminate the controversy that revolves around accounting standards. I will present to you the facts and differences between the two, state the facts and identify

Initially, the conceptual framework was revised by the IASB and the Financial Accounting Standard Board (FASB), which is the US national accounting

Before 2001, none of the major economies in the world requires the use of International Financial Reporting Standards (IFRS). However, since IFRS was adopted and required by the European Union (EU), IFRS is currently the most widely shared set of accounting standards with its application required or permitted by approximately 120 countries as indicated by the IFRS Resources (2015). IFRS, perceived as “a single set of high-quality, understandable and enforceable accounting standards” (IASB, 2007, p.4), shows its prevalence all around the world. Nevertheless, there are still some opponents against such harmonization. “The likelihood that any U.S. company will be forced to switch from using today’s version of U.S. Generally Accepted Accounting Principles (GAAP) to using today’s version of IFRS is absolutely zero”(2010), said the specialist in corporate financial reporting, Bruce Pounder, doubting the possibility of eliminating differences between IFRS and U.S. GAAP, not to mention sharing a single set of accounting standards in all countries.

IASB was founded in April 2001, as a replacement for the IASC. It consists of 15 board members from different countries, with a diverse financial reporting background appointed by a board of Trustees (Members of the IASB, 2007). It is the main standard-setter for the countries that use IASs for their financial reporting. USA on the other hand has its own set of standards (GAAP) issued by the Financial Accounting Standards Board. But IASB and FASB since 2002 have been working together focusing on making a converged set of high quality global standards. This will have a huge impact on a number of elements, such as investors, stock markets, accountants,

The purpose of the IASB Framework is imperative and this can be judged from the purpose it intends to serve to users of the standards

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, or IFRS, are a set of standards designed to keep accounts comparable internationally. They are increasingly important as we move towards a global economy and with the increasing number of international companies. The United States, however, typically uses a different set of accounting standards. These are called the Generally Accepted Accounting Principles, or GAAP. The SEC has displayed interest in switching to the international standards recently, however. “In November 2008, the SEC proposed a road map that, if several milestones are achieved, could lead to a mandated use of IFRS for domestic listed companies in 2014. These actions of the SEC highlight the dedication of the U.S. to