...The Relationship between IASB and FASB Doris Edwards ACC/541 – Accounting Theory and Research Instructor - Leslie Crews, JD, MBT March 28, 2011 Financial Accounting Standards Board History The Financial Accounting Standards Board (FASB) is a private sector organization that was established in 1973. The FASB is governed by the Financial Accounting Foundation (FAF). The FAF appoints the members of the Financial Accounting Standards Advisory Council (FASAC), the council is the entity that informs the FASB of pressing issues or topics to be reviewed (2003, Webster’s). The goal of the FASB is to set standards for financial accounting practices and the production of financial reports. The FASB works to ensure that financial reporting is; transparent, reliable, relevant, comparable, and consistent. It is the responsibility of the FASB to regularly review standards, to check for deficiencies within the current standards, and to also look for methods to improve reporting based on current day needs. As set by Section 108 of the Sarbanes-Oxley Act any standard set by the FASB is recognized to be “generally accepted” for the purpose of the federal securities laws (Schroeder, 2011). The FASB initially issued standards through two different types of pronouncements, these are more commonly known as Statements of Financial Accounting Standards...
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...Relationship between the IASB and the FASB ACC 541 Relationship between the IASB and the FASB The United States plays an enormous influence on the accounting standards set forth throughout the world in the global economy. The United States follows the Financial Accounting Standards Board (FASB) which has created a large number of accounting standards that are interpreted and accepted by international companies and by the International Accounting Board (IASB). The IASB plays a similar role like the FASB for the rest of the global economy. The IASB is located in London, England and is an independent, privately funded accounting standard-setter. The IASB board consists of members from nine different countries with the IASB’s sole purpose to ‘achieve convergence in accounting standards throughout the world’ (Cellucci, 2011). The IASB and FASB have been collaborating since 2002. This collaboration was derived to create a convergence of the United States Generally Accepted Accounting Principles (GAAP). The convergence project started when the two organizations met during a joint meeting in Norwalk, Connecticut on September 18, 2002. The two board’s goal for the convergence project was for developing a high-quality compatible accounting standards that can be used for both domestic and cross-border financial reporting. They also promised to use their best efforts to make their existing financial reporting standards compatible as soon as practicable and to coordinate their...
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...Running head: RELATIONSHIP OF IASB AND FASB The Relationship of the International Accounting Standards Board and the Financial Accounting Standard Board Accounting Theory & Research 541 The History & Relationship of the International Accounting Standards Board and the Financial Accounting Standard Board The International Accounting Standards Board (IASB), and independent standard-setting body of the IFRS Foundation was created after the Financial Accounting Standards Board (FASB) to develop and establish universal accounting procedures and standards for both boards. In recent years however, there has been significant shifts in the relationship between both entities given various considerations. Currently, IASB and FASB are working on a joint venture referred to as the convergence project, in hopes of eliminating a variety of differences between International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles. It is further my intent to provide a brief history of the relationship between the two aforementioned entities as well as briefly address the importance of the prescribed course of study within the University of Phoenix’s Master of Accountancy program for individuals who are pursing professions within the field of accounting. History In 1973, FASB was born of the Financial Accounting Foundation (FAF) to generate and rectify practices of financial accounting and reporting for nongovernmental businesses. This change...
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...IASB and FASB Relationships IASB and FASB Relationships University of Phoenix ACC/541 University of Phoenix ACC/541 The International Accounting Standards Board (IASB) and the Financial Accounting Standard Board (FASB) have made huge changes in order to understand the relationship between the two. The IASB was created to provide observance in how the financial statements were published and their global acceptance and to work towards improvements of accounting standards. In this paper, brief analysis of the IASB and FASB history and how the MSA program prepares students for the career path in becoming a qualified accountant. The mission to improve and establish accounting and financial reporting for public and private sectors is entitled to the FASB. Both the IASB and FASB have the same tasks of improving common understanding of financial reporting, and regulating rules and laws with their own requirements on accounting. The FASB is a nonprofit organization that centers on GAAP and the IASB deals with the international financial standards board. The Master of Accountancy (MSA) program is designed to enhance the knowledge of people who already possess an undergraduate degree and they wish to continue their education. These programs are used to allow interactions with other individuals in learning solutions to problems in accounting. The MSA programs are allotted to provide students with historical perspectives of different aspects within accounting. Since...
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...the first one is the International Accounting Standards Board (IASB), and the second is the Financial Accounting Standards Board (FASB). The two boards are putting together this joint adventure to have a universal standard recognized internationally by entities for reporting of financial statements. This adventure will help to ensure that reporting of financial information is consistent globally and in the United States. The adventure will also help investors, stakeholders, the public, and financial institutions to read the financials in a clearer format. This paper will provide a brief understanding of the two boards joint adventure referred to as the convergence project. After discussing the relationship between the two boards along with the equivalents of the FASB original pronouncements, the paper will explain briefly how the MSA program prepares students for a professional life within the accounting vocation and how he or she will be able to make ethical business decisions. IASB and FASB The IASB is an independent regulatory body based in the United Kingdom, which aims to develop a set of global accounting standards (Investopedia, 2013). The IASB has 14 board members 12 are full-time and two are part-time and was established in 2001 as the successor to the International Accounting Standards Committee (answer, 2013). The FASB established in 1973, consist of seven members (Investopedia, 2013). The FASB is an independent board consisting of accounting professionals...
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...In 2002 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) met and issued the Norwalk Agreement where they both agreed to develop of high quality accounting standards. Since that time the FASB and the IASB have been working on joint projects a.k.a convergence projects designed to improve both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), eliminate differences between them, and ultimately make the standards fully compatible. In 2010, to increase efficiency the boards decided to focus on the priority projects. Two of those projects, fair value measurement and statement of other comprehensive income, are poised for release. Now, the “big three” remain—financial instruments, revenue recognition, and leases. The IASB is also working to its monster project on insurance contracts, with the FASB closely engaged in the discussion. Therefore, bellow is the list of the active joint FASB/IASB projects according to current technical plan on the fasb.org website: - Accounting for Financial Instruments (Updated November 10, 2011): • Classification and Measurement (Updated November 10, 2011); • Impairment (Updated November10, 2011); • Hedging (Updated November 10, 2011). - Revenue Recognition (Exposure Draft issued November 14, 2011); - Leases (Updated November 15, 2011); - Balance Sheet – Offsetting (Updated August 15, 2011); - Consolidation: Policy and Procedures (Exposure...
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...Board (IASB) and the Financial Accounting Standards Board (FASB) are working on a joint venture known as the Norwalk Agreement that will most likely affect current and future individuals within the accounting field. Discussed within is the relationship between the IASB and FASB, the IASB equivalents of the original FASB pronouncements, and how a Master’s of Science in Accountancy program can prepare a student for a professional life within the field that will likely be affected by both boards. The History and Relationship of the IASB and FASB In 1973 both the FASB and International Accounting Standards Committee (IASC) were formed. FASB was created with the mission to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities providing decision-useful information to investors and other users of financial reports (Financial Accounting Standards Board, n.d.). The IASC began as the first body to set international standards and in 2001 the IASC became independent and further known as the IASB. Since 2001 the IASB has issued multiple International Financial Reporting Standards (IFRSs) that are currently permitted or required for more than 100 countries. In 2002 FASB and IASB began working with each other to improve and converge U.S. generally accepted accounting principles (GAAP) and IFRS (Financial Accounting Standards Board, n.d.). The partnership became known as the Norwalk Agreement and together FASB and IASB...
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...the past nine years seen the accounting policy making suggesting a complete overhaul in the way financial statements are reported and a convergence between the US's generally accepted accounting principles (US GAAP) and the International Financial Reporting Standards (IFRS). This has been through various meetings between the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB), two boards which determine these accounting standards. This paper therefore evaluates the history of the two boards and their relationship and looks at IASB equivalents to FASB original pronouncements. It also describes how a Master of Science in Accounting would prepare a student for an accounting profession. History of the Relationship between FASB and IASB US Financial Accounting Standards Board (FASB) is a board which is responsible for setting and improving financial accounting standards in the US and for governing and fostering preparation of financial reports by non-governmental organizations (Financial Accounting Standards Board, 2012).International Accounting Standards Board (IASB) on the other...
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...Financial Reporting and Standard Setting by the SEC, FASB, IASB, and, GASB Abstract In the accounting industry there are different organizations that have been established to design, implement, and oversee accounting standards and financial presentation processes. Such organizations include the Securities Exchange Commission, SEC, the Financial Accounting Standards Board, FASB, the International Accounting Standards Board, IASB, and the Governmental Accounting Standards Board, GASB. Each of these organizations works closely with the others to attempt to provide the accounting industry with a similar, if not identical, set of accounting standards that align with those of the U.S. GAAP – Generally Accepted Accounting Principles and IFRS – International Financial Reporting Standards. The strengths and weaknesses of these organizations identify their similarities and differences and enable the organizations to continue to grow with the finance and accounting industries. In the accounting industry there are several different organizations specifically designed to set, maintain, and regulate accounting standards and financial statement presentation. Among these organizations are the U.S. Securities and Exchange Commission, or SEC, the Financial Accounting Standards Board, or FASB, the International Accounting Standards Board, or IASB, and the Governmental Accounting Standards Board, or GASB. Each organization was established...
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...Valerie Turnbow The FASB begin with the abolishment of the APB (Accounting Principles Board) after the recommendation of the Wheat committee in 1972. The IASB is a private board created in 1973 to create accounting standards to be observed worldwide. Beginning with the Norwalk agreement in 2002 the FASB and the IASB committed both entities to making mutually compatible standards both foreign and domestic. The rules of the FASB/IASB only govern financial accounting: how a company communicates with its investors and debtors. The Norwalk agreement also commits the two boards to coordinate the two programs. The Sarbanes-Oxley Act of 2002 authorized the SEC to recognize the rules of the private boards as long as they consider international convergences on accounting principles to protect the investors. The FASB focuses on U. S. accounting standards and the IASB focuses on global accounting standards. “The IASB and FASB are working together to combine various accounting and financial reporting requirements developed by both entities into single international financial reporting standards.” (S. Carty). The two boards are making one standard because having different standards made it difficult for international companies to know which standard to follow. Having on standard made it easier for companies to follow and make financial reporting transparent. The two boards do have major differences even though they are working together. The FASB is a private non-governmental...
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...ACC/541 Accounting Theory and Research September 30, 2015 Valerie Turnbow The Financial Accounting Standards Board (FASB) is the accounting board used in the United States. The FASB is tasked with improving and establishing the standards of financial accounting and reports for education of the public (Schroeder, Clarke, Cathey, 2011). The International Accounting Standards Board (IASB) is the accounting board used to simplify the process for those seeking capital or investment opportunities across national boundaries. In this paper we will discuss the history and relationship of both the FASB and the IASB. Additionally we will discuss how the Masters of Science in Accountancy (MSA) will prepare students for a career in the vocation of accounting. FASB and IASB history The FASB was created in 1973 after the Wheat Committee, chaired by Francis Wheat suggested that the Accounting Principles Board be abolished and a new board created. The FASB was to be comprised of representatives from a variety of organizations and be full-time paid employees. The FASB has an advisory council that will keep them updated on major policy issues, as well as the selection of task forces. This council is known as the Financial Accounting Standards Advisory Council (FASAC). The IASB was also created in 1973. The IASB is an independent private sector body. The IASB has two main objectives. The first being to formulate and publish in the public interest accounting standards to be observed...
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...The two types of accounting standards board that are being discussed is the International Accounting Standard Board (IASB) and Financial Accounting Standard Board (FASB). The first thing that needs to be discussed is the history of the two boards. The history will explain the relationship between the IASB and FASB. There will also be a discussion on how the University of Phoenix Master in Science of Accounting program is related to the IASB and FASB. The Accounting Principles Board (APB) was removed and replaced with the FASB in 1972. They determined that all of the members of the FASB were to be full-time paid employees which the APB were only part-time and were not paid. After 1973, the FASB was given the official approval of being in charge of issuing accounting standards (Schroeder, Clark, & Cathey, 2011). The FASB consists of the American Accounting Association, AICPA, Financial Executives Institute, National Association of Accountants, and the Financial Analysts Federation (Schroeder, Clark, & Cathey, 2011). In 1997, the FASB board of trustees decided that they needed to add four members that are from public interest organizations (Schroeder, Clark, & Cathey, 2011). The four new members were from Financial Accounting Foundation (FAF) which appoints the Financial Accounting Standards Advisory Council (FASAC), which in turn advises the FASB on major policy issues, selection of task force, and agenda of topics (Schroeder, Clark,...
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...intended to explain a joint venture referred to as the convergence project, between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (FASB, 2002). This paper will also provide a brief history of the relationships between the two boards, and the equivalents between IASB and FASB. Along with an explanation of how the Master of Science in Accountancy Program helps prepare students for a professional life, within the accounting vocation. Accounting Standards Boards Within each country, there are different types of governments who follow different sets of regulations and require different accounting standards. With the current growth of global commerce, companies conducting business abroad require more consideration in there accounting, versus a business who only conducts commerce in one country. Many countries do not have the same level of regulation boards as the United States, who follows the standard set of principles by FASB, because of the accounting reporting differences, it is extremely important for any global organization to use IASB for best financial practices on a global scale. However with such a high-demand for global commerce, following different sets and types of accounting regulations has caused confusion and has become cumbersome to the stakeholders involved in international commerce (FASB, 2003). National Regulatory Boards Local and state laws, plus a host of regulatory commissions establish a regulatory environment...
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...understand not only the accounting principles used by the company, but the language of the country where they reside, and the currency used in preparation of the financial statements. “If investors and creditors cannot obtain understandable financial information about companies that operate in foreign countries, they are not likely to invest in or lend money” (Schroeder, Clark & Cathey, 2011). The result is a move by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonize and eventually converge accounting standards commonly used in different countries. History of the relationship between the FASB and the IASB The IASB was formed in 1973 and is based out of London, England. They develop and enforce financial reporting standards for publicly held companies. The first efforts to harmonize domestic and international financial reporting standards (IFRSs) focused on “reducing differences among accounting principles used in major capital markets around the world” (FASB, 2012). Starting in the 1990s, convergence of financial standards replaced the notion of harmonization. Convergence focused on the development of a “single set of high quality, international accounting standards to be used in at least all major capital...
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... Accounting Standards Boards The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) first converged in 2002 following the Norwalk Agreement (Whittington, 2007). The convergence was inspired by the need of the boards to produce a solid infrastructure by uniting the two frameworks represented by each board in a bid to harmonize accounting practices worldwide (Whittington, 2007). Additionally, the convergence was also inspired by the need to attain improvement in accounting standards by achieving completeness, and improving coherence (Whittington, 2007). In the IASB framework for example, Bullen, and Crook (2005) note that there were specific areas of difficulty that benefited from the convergence. Some of these areas include the explicit meaning of what liability is, and the distinction between equity and liability. Joining Forces During the FASB/IASB convergence announcement in 2002, the two boards stated that they would work together to develop accounting standards for both cross-border and domestic financial reporting. They also stated that they would work toward making their respective standards compatible, and that future work programs would be done with the need to retain compatibility (Schroeder, Clark & Cathey, 2011). Another development in the FASB/IASB relationship took place in 2004 when the two bodies announced that they were working on two joint projects. The projects...
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