...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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...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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...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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...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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...varying currencies, there has been a need for the accounting principles and standards to be converged. This has in 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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...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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...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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...Abstract This paper is 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...
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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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...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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...anything for that matter, guidelines and policies have to be put in place. This also involves internationally run businesses as well. The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have worked diligently through the years to ensure these guidelines are followed. The following discussion will be about the convergence project of boards, their relationship and the relations between their original pronouncements. Discussion will also reflect how the Master’s of Science in Accountancy program prepares the student for a professional life within the accounting vocation. International Accounting Standards Board The IASB, which was once the International Accounting Standards Committee (IASC), is the first international standard-setting body (International Convergence of Accounting Standards—A Brief History) organization based in the United Kingdom that formed in 2001 to advocate harmonization. They strove to make the standards uniformed for national and international companies and have one set of financial statement to accommodate both parties. Their purpose is also to maintain and ensure the standards for accounting are followed and understood. There are at least 100 companies who abide by the guidelines set forth by the IASB (International Accounting Standards Board). “Capital-seeking firms must reconcile their financial statements to the accounting rules of the nation in which they are seeking capital...
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...national accounting become more disconcerting when trade barriers between nations were reduced due to international cooperation developments. Efforts have increased during the past decade to move nations toward using international standards. The International Accounting Standards Board (IASB) is an organization that regulates the accounting standards which are accepted globally by almost all the countries in the world. This paper will first discuss the history of IASB. Next it will explain the structure of IASB. After that, the paper will talk about how International Financial Reporting Standards (IFRS) are created. Finally, it will describe the effort to converge IFRS with Generally Accepted Accounting Principles (GAAP). History of IASB International Accounting Standards Board was first known as International Accounting Standard Committee (IASC) which existed from 1973 to 2001. It was responsible for developing the International Accounting Standards (IASs) and promoting the use and application of these standards. After nearly 25 years of achievement, the IASC concluded that it must find a way to converge between national accounting standards and practices, and create high-quality global accounting standards. To do that, IASC saw a need to change its structure in order to better work together toward global harmonization. The IASC operated until April 2001 when the International Accounting Standards Board (IASB) assumed its accounting standard-setting responsibilities from...
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...is considered acceptable business practices in regard to the relationship between these functions. In the United States, that governing body is known as the Financial Accounting Standards Board or FASB. FASB helped to refine and establish what is known as the Generally Accepted Accounting Principles or GAAP. These principles have laid the foundation for modern day accounting practices and have served as a road map for financial accountants worldwide. In 2001, a new board was established to bring unity to international accounting practices. It is known as the International Accounting Standards Board or IASB. IASB has its own set of standards commonly known as International Financial Reporting Standards or IFRS. Together these two entities lay the groundwork for accountants to follow to most accurately and ethically report the financial activities of their respective organizations. Although both these organizations have striking similarities and strive to serve a common goal, there are marked differences in their approach to financial reporting standards. In recent years, FASB and the IASB have affirmed their commitment to bring together their basic fundamentals and create a unified accounting resource that will become the standard for accounting practices across the world. This effort is known as the FASB/IASB convergence project. This project will address and make efforts to eliminate the existing differences between the two boards. The ultimate goal of this project will be to...
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