...release of a May 26, 2011 Staff Paper, the SEC is now providing more direct insight into some more innovative thinking regarding the future of IFRS in the U.S. This staff paper, entitled Exploring a Possible Method of Incorporation, outlines one of several possible approaches to the use of IFRS in the U.S. Additional staff papers are expected in the coming weeks. This first paper explores an approach that has become known as “condorsement.” During the 2010 AICPA National Conference on Current SEC and PCAOB Developments, SEC Deputy Chief Accountant Paul Beswick introduced the term “condorsement” while discussing the possible use of IFRS in the U.S. In an April 4 interview with the Journal of Accountancy, Leslie Seidman, Chairman of the FASB, described her interpretation of condorsement...
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...Derek Seedorf Acct 450 Conceptual Framework Project Analysis Spring 2015 Directions Investigate the “Conceptual Framework Project” of the FASB and IASB. Answer the following: 1. When did the project begin? The in class text seems to suggest that the project initially started in October 2004 when the FASB and IASB decided to add to their agendas the joint project of developing an improved conceptual framework for both the IASB’s Preparation and Presentation of Financial Statements as well as the FASB’s Conceptual Framework Project (CFP). However, I thought the reading of the text was a little unclear, but I verified the information using an online source. Looking online it seems as though adjustments are still being made to the project to date so it is ongoing. 2. What has the progress been to date? a. What outputs have occurred? One of the achievements the CFP has made is deciding a recognized definition of an asset and a liability. The previous definitions were thought to have been flawed. While it seems unnecessary to list the definitions here, they can be found on pg. 69 of the text. In general the CFP has worked towards resolving differences between certain elements and their definitions. Also, the project has worked to revise recognition criteria and concepts in order to eliminate current differences and provide a basis for resolving such issues. The test gives an example of the derecognition and unit of account as...
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...Running head: THE IASB AND FASB The IASB and FASB Amber Lynch ACC/541 Week 1 Paper March 10, 2014 The IASB and FASB Although the concept of the convergence of accounting standards is a new concept to some the idea has existed since the 1950’s. This idea came about as a solution for economic integration and the uptick in international business operations. When the project was first constructed it focused mainly on harmonizing the differences in principles that existed across many different capital markets throughout the world. The idea of harmonization remained in place until the 1990’s when the concept of convergence became the new priority. The concept of convergence centers on the concept of creating one set of accounting standards that would be used across all of the major financial markets in the world (FASB, n.d.). In order for this set of accounting standards to be uniform it requires the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to work together towards the creation and implementation of the standards. The FASB has been the organization in charge of establishing the standards for financial accounting in the private sector within the United States since 1973 (FASB, n.d.). These standards are formally recognized by both the Securities and Exchange Commission and the American Institute of Certified Public Accountants (FASB, n.d.). They are more commonly known as Generally Accepted Accounting Principles...
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...Standards Board (FASB) and the International Accounting Standards Board (IASB) signed the Norwalk Agreement in 2002, and agreed to work together towards the development of high-quality, compatible accounting standards that could be used globally. The creation of short-term and long-term convergence plans in order to assist the boards in prioritizing so that they could adhere to their agreement of “compatibility as soon as practicable.” The outcome of 37 key joint IASB/FASB projects based on the results of the Convergence table by Paul Pacter and the ongoing debate of convergence of IASB and FASB, or the sole adoption of IASB. Convergence or Adoption: From U.S. GAAP to IASB September 18, 2002, in Norwalk, Connecticut, the IASB and the FASB signed a memorandum of understanding in which the two boards promised to work hard to “(a) make their existing financial reporting standards “fully compatible” as soon as is practicable and (b) to coordinate their future work programs to ensure that once achieved, compatibility is maintained.” This became known as the Norwalk Agreement. Under the Norwalk Agreement the IASB and the FASB each agreed that they would commit to the development of high-quality, compatible accounting standards that could be used for both cross-border and domestic financial reporting. In an effort to prioritize, the boards launched a series of “short-term convergence projects” and “long-term convergence projects.” Some of the “long-term convergence projects” are still in...
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...The BIGGER Picture (Ch. 1) Why do we need financial reporting? What is its purpose? Who are some of the key players in financial reporting? PROVIDER EXTERNAL USERS REGULATORS Your textbook (as most out there) evaluates accounting issues from a FASB perspective. We will discuss issues from the FASB’s conceptual framework, but also will try to think about others’ perspectives as well. Before we talk about the conceptual framework, we will discuss the structure of the ultimate product of the financial reporting process – the company’s annual report/10-K. What does it look like? What information is typically included? 1. Description of the company’s business and risk factors 2. Management’s Discussion and Analysis (MD&A) 3. Comparative Financial Statements (including notes to financial statements) 4. Independent Auditor’s Report on Financial Statements 5. Management’s Report on Financial Statements and Internal Controls 6. Auditor’s report on internal controls 7. Who develops financial reporting standards in the U.S.? That is, who influences Generally Accepted Accounting Principles (GAAP)? (1) Securities and Exchange Commission (2) AICPA (1938-1973) (3) FASB What constitutes GAAP? Generally accepted accounting principles have authoritative support. * Either a rule-making body has established a principle or, over time, a practice has been adopted as appropriate because of universal application. What are the sources of GAAP...
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...Financial Crisis Advisory Group July 28, 2009 To the Members of the International Accounting Standards Board and the US Financial Accounting Standards Board: On behalf of the members of the Financial Crisis Advisory Group (FCAG), we are pleased to present our report to the Boards about the standard-setting implications of the global financial crisis. We believe that confidence in the transparency and integrity of financial reporting is critically important to global financial stability and sound economic growth. We hope that our conclusions and recommendations will be helpful to the Boards as they work together to simplify and improve accounting standards on financial instruments and other key areas highlighted by the crisis. The FCAG will be meeting in December to review the progress that has been made. In the meantime, we are available to assist the Boards in their efforts. Sincerely, Harvey J. Goldschmid Co-chair Hans Hoogervorst Co-chair cc: Gerrit Zalm, Chairman of the Board of Trustees, International Accounting Standards Committee Foundation John J. Brennan, Chairman of the Board of Trustees, Financial Accounting Foundation Report of the Financial Crisis Advisory Group – July 28, 2009 Table of Contents Page I. INTRODUCTION _________________________________________________________________________ 1 II. PRINCIPLE 1: Effective Financial Reporting____________________________________________________ 3 Intersection of Prudential Regulation...
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...Chapter 6 Property and Equipment and Other Assets Overview 6.01 Health care entities use various kinds of property and equipment. Those assets are generally significant to the financial position of institutional health care entities, such as hospitals and nursing homes. Typical accounts used to record property and equipment transactions are land, land improvements, buildings and improvements, leasehold improvements, equipment (fixed and movable), leased property and equipment, accumulated depreciation and amortization, and construction in progress. Health care entities also have intangible assets, which may be acquired in connection with business combinations or purchases, or developed from other resources of the entity. Intangibles with finite lives are amortized according to their useful life. Examples of intangibles include: Health Plans customer relationships, such as employer groups or members provider networks trademarks trade names software licenses favorable leases non-compete agreements goodwill Hospitals and other health care facilities licenses certificates of need managed care contracts goodwill Physician practices medical charts non-compete agreements managed care contracts goodwill 6.02 6.03 Supplies inventories are generally not very significant to the financial position of health care entities. However, because of the volume and cost of supplies used, they may be much more significant to operating expenses and the statement of operations. Supplies typically...
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...Accounting Standards Codification® Notice to Constituents (v 4.6) About the Codification FASB Accounting Standards Codification® Notice to Constituents (v 4.6) About the Codification Notice to Constituent version numbers - The Notice to Constituents contains a version number indicating the degree of change within a particular version. Versions ending with ".0" represent substantive changes to the text, whereas versions ending with a number other than zero represent editorial or clerical corrections. Page FASB Accounting Standards Codification ................................................................................... 4 Codification Goals .......................................................................................................................... 5 Codification Research System ........................................................................................................ 6 Content Matters............................................................................................................................... 7 Population of codified standards as of July 1, 2009 ................................................................... 7 Standards issued by standard setters other than the SEC ........................................................ 7 Standards issued by the SEC................................................................................................... 8 Essential and nonessential content ................................
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...Accounting Standards Codification® Notice to Constituents (v 4.5) About the Codification FASB Accounting Standards Codification® Notice to Constituents (v 4.5) About the Codification Notice to Constituent version numbers - The Notice to Constituents contains a version number indicating the degree of change within a particular version. Versions ending with ".0" represent substantive changes to the text, whereas versions ending with a number other than zero represent editorial or clerical corrections. Page FASB Accounting Standards Codification ................................................................................... 4 Codification Goals .......................................................................................................................... 5 Codification Research System ........................................................................................................ 6 Content Matters............................................................................................................................... 7 Population of codified standards as of July 1, 2009 ................................................................... 7 Standards issued by standard setters other than the SEC ........................................................ 7 Standards issued by the SEC................................................................................................... 8 Essential and nonessential content ................................
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...financial reporting between numerous entities. Accounting standards develop with economic development. In the early development of accounting standards the standards were region specific. For example, individual nations developed accounting standards specific to its economy and the needs of the users in the nation’s economy by establishing a committee or a board. Currently there are two main accounting standard setting boards, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). These two boards are currently collaborating in a goal to establish a “single set of high-quality accounting standards for all listed and other economically significant business enterprises around the world” (Schroeder, Clark, & Cathey, 2011, p. 85). The FASB is an accounting standards board that evolved in the United States from the first accounting standards committee, Committee on Accounting Procedure (CAP). CAP became Accounting Principles Board (APB) that was later replaced by FASB (Schroeder, Clark, & Cathey, 2011). The IASB is an international accounting standards board that derived from the first International Accounting Standards...
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...IFRS VS.GAAP Tyana Campbell ACC/291 November 12, 2014 Habib Ousmane Diallo The International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) are rules and guidelines established to attempt to standardize accounting and recording practices across the United States and Internationally. International Financial Reporting Standards (IFRS) is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS uses fair-value accounting of assets and liabilities. GAAP also known as Generally Accepted Accounting Principles which is a common set of accounting principles, standards and procedures that companies use to compile their financial statements. Generally an accepted accounting practice is a combination of authoritative standards and the commonly accepted ways of recording and reporting accounting information. Some differences between IFRS and GAAP is that IFRS is considered more of a principle based accounting standard used in more than 110 countries where as GAAP is considered more rule based and is used generally within the United States. By being more principle based, IFRS represents and captures the economics of a transaction better than U.S. GAAP. Under GAAP, the research is more focused on the literature whereas under IFRS, the review of the facts pattern is more through. Investopedia states another difference between...
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...International Financial Reporting Standards (IFRS) An AICPA Backgrounder 1 Table of Contents Get Ready for IFRS ........................................................................................ 2 Worldwide Momentum ................................................................................. 2 SEC Leadership in International Effort .......................................................... 3 The SEC Work Plan........................................................................................ 4 FASB and IASB Convergence Efforts............................................................. 5 AICPA Participation ....................................................................................... 7 Two Sides of the Story ................................................................................... 7 Differences Remain Between U.S. GAAP and IFRS ....................................... 8 What CPAs Need To Know ............................................................................ 8 Appendix ..................................................................................................... 10 Organizations Involved ................................................................................ 12 1 Get Ready for IFRS The growing acceptance of International Financial Reporting Standards (IFRS) as a basis for U.S. financial reporting represents a fundamental change for the U.S. accounting profession. The number of countries that require...
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...Executive Summary The report analyzes three options to record the transfer of the in process research and development project Drug X from Bust-a-Knee to Pharmers. Based on the analysis, we recommend Options #3 as the approach to record the journal entries at the date of transfer. The first option records the acquisition of Drug X and OuchX into an intangible account -- “ownership”. In the case of transfer ownership of the IPR&D of Drug X from Brust-a-Knee to Pharmers, Brust-a-Knee receives $2 million cash and incurred $2 million loss. The disadvantage of treating the $2 million loss into the expense account of Drug X is there may be future economic benefits for Brust-a-Knee to sell Drug X because the estimated revenue is $5.5 million. The second journal entry records increase of cash and revenue by $4 million, increase of cost of goods by $4 million and decrease in IPR&D account by $4 million. The second option shows changes in asset from IPR&D to cash as well as a matching revenue and expense caused by the transaction. However, the second journal entry does not consider the future possible $3.5 million profit by selling Drug X as well. The major difference between Option#3 and the other two options is that the $3.5 million is counted as the sales revenue at the date of transfer because it is highly possible for Bust-a-Knee to receive the future economic profits. Since Pharmer is the market’s largest pharmaceutical company, its technology and marketing skills...
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...entity when it undertakes a business combination. The proposed accounting standards addresses the accounting principles and method that is relevant for reporting acquisition of business entities. When an entity acquired another entity as a business combination it should account for the business acquired at its fair value at the acquisition date. Financial accounting standard board propose in their statement of accounting standard that financial reporting of all business enterprises shall recognize this standard except “formation of a joint venture, transactions or events between entities under common control, combinations between non-for-profit organizations, or acquisitions of a for profit business by a non-for-profit organization” (FASB). Accounting standards are written policy documents issued by expert accounting body or by government or other regulatory body covering the aspects of recognition, treatment, measurement, presentation and disclosure of accounting transactions and events in the financial. The objective of accounting standards is centered on harmonization of accounting policies and practice followed by different business entities so that the diverse accounting practices adopted for various aspects of accounting can be standardized. Bibliography Aboody, D., R. Kasznik and M. Williams. 2000. Purchase versus pooling in stock-for-stock acquisitions: Why do firms care? Journal of Accounting and...
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...governance makeup. The third and fourth areas, titled “investor understanding and education regarding IFRS” and “examination of the U.S. regulatory environment that would be affected by a change in accounting standards,” have to do with the education to understand and regulate a new environment. The fifth and six areas address “the impact on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations and accounting for litigation contingencies; and human capital readiness” (www.sec.gov). Previous to the Work Plan, beginning in 2002 the FASB and IASB announced a Memorandum of Understanding (MOU), which was updated in 2006 and 2008, to work towards a single set of standards (www.sec.gov). More recently, in May 2011, SEC staff developed the “endorsement” method in which the FASB would remain control as the U.S. standard setter, while incorporating IFRS over a longer period of time. The FASB’s overseer, the FAF, supports the endorsement method, but says that U.S. GAAP need not be identical to IFRS, only comparable (www.pwc.com). AICPA senior vice president of...
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