...Assignment 1 The convergence of financial reporting and accounting standards is a valuable process that contributes to the free flow of global investment and achieves substantial benefits for all capital markets stakeholders. It improves the ability of investors to compare investments on a global basis and thus lowers their risk of errors of judgment. It facilitates accounting and reporting for companies with global operations and eliminates some costly requirements. It has the potential to create a new standard of accountability and greater transparency, which are values of importance to all market participants including regulators. It reduces operational challenges for accounting firms and focuses their value and expertise around an increasingly unified set of standards. It creates an unprecedented opportunity for standard setters and other stakeholders to improve the reporting model. Convergence is a long-term process. While it may take years to reach the important goal of a single set of standards, progress has already been achieved. Current accounting and reporting practices fall short of meeting the information needs of the capital markets in the 21st century. A critically important element in the solution to this problem is the convergence of US GAAP and IFRS, a process now under way at an early stage. The goal is an improved reporting model built on principle-based standards that can be applied in a cost-effective manner. The convergence of accounting standards is a matter...
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...International Convergence of Accounting Standards Standardization is a common theme across many sectors as the world continues an ever developing push towards globalization. This globalization requires the economic integration of nations into an international economy. In order to achieve integration it was recognized that there needed to be a standardized accounting system for financial information to be exchanged and interpreted. Thus, a goal and a path were developed to obtain the International Convergence of Accounting Standards. To understand the International Convergence of Accounting Standards knowledge is needed of its meaning, the roles of the IASB and FASB, it's history, where the world is in its process, futures plans, its benefits, and what the International Convergence means for Accounting in the US. Meaning of International Convergence of Accounting Standards: The FASB believes that the goal of convergence is to establish an exclusive set of reputable, international accounting standards. Convergence allows for companies both domestic and internationally to use the same standards for financial reporting. The path needed to develop such standards involves the FASB and the IASB to facilitate their efforts to improve upon the U.S. generally accepted accounting principles and the International Financial Reporting Standards and eradicate the differences between the two. Description of IASB & FASB and their roles: The International Accounting Standards Board is an...
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...One day we don’t have to talk about the story of convergence between International Financial Reporting Standards (“IFRS”) and U.S. GAAP (“GAAP”). I believe that they will be fully converged someday in the future. It is generally assumed that, all standard setters would agree on a single, high-quality accounting standard and it can meet everyone’s need. However, there is also a long road to achieve this ultimate goal. Fortunately, the steps of convergence never stop. There are more than 100 countries are adopting or processing adopting IFRS, it has already become the most popular international accounting standard in the world. Early in 2002, the International Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) agreed that a common set of high quality, global accounting standards was priority of both Boards. Then, the Securities and Exchange Commission (“SEC”) proposed a Roadmap for the potential use of financial statements prepared in accordance with IFRS as issued by the IASB by U.S. issuers for purposes of their filings with the Commission in 2008 which can be seen as a milestone as the upcoming fully convergence. Although in May 2011, the SEC staff released a paper which describe a slower process of incorporating IFRS into the US financial reporting system, it doesn’t change the fact that the convergence still processing. And the SEC plays a role as a promoter. There is no doubt that the United States is only “Superpower” owning the...
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...and creditors to compare the financial statements of companies in different countries. Therefore, a standardised accounting standard should be introduced and follow by the companies all around the world in recording their financial statements in order to facilitate the investors in doing their business. International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP) are two main accounting principles that is widely used in the majority of the companies. However, there will be still conflict in the interpreting and understanding each other financial statements due to these two different approaches. Therefore, to overcome this problem, International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are working on it by taking the necessary steps as time passes to close down the gap and standardised the accounting principles globally making it easier for all parties. (157 words) 1.0 Introduction In the world of globalization, a number of countries had been experiencing the convergence of their local GAAP and IFRS in order to apply the international accounting standard to suit the growing business world. This does not left out the people of the United States who are also trying to converge the accounting standards of US GAAP and IFRS in order to close down the gap between the accounting standards. FASB and IASB are the main international bodies assisting the Securities and Exchange Commission (SEC) to achieve...
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...Globalization of Accounting Standards ACC 201 This year, the Securities and Exchange Committee is looking to make a decision on international rules regarding accounting standards. The United States has expressed support of accounting harmonization rather than accounting convergence. Accounting harmonization is the goal to adjust the consistencies among the different methods, procedures, or systems of other countries in order to make them more compatible with each other uniformly. Accounting convergence, on the other hand, has a distinctly different definition; it is the goal to come to an agreement on accounting standards to become a unified whole. Only a few years ago, however, the United States strongly favored convergence over harmonization. Regardless of the nitpicking of words and what the United States supports and what it does not; the task at hand, which is to create an infrastructure for global standards in accounting, is a very challenging one. The International Financial Reporting Standards is a set of accounting standards developed by a self-regulating, nonprofit organization called the International Accounting Standards Board. The IFRS is extremely important for large companies because they usually have subsidiaries in foreign countries but a major challenge for these companies, evidently, are the differences in accounting procedures. Adopting a set of international standards would allow companies to report finances to investors or auditors...
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...Accounting Standards Board In the last decades, there is a significant increase in corporations, which operate in different regions of the globe, and resulted in an increased demand for global financial reporting. In this research paper, we will analyze the relationship between the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB). The research paper will discuss also how the Master’s of Science in Accounting (MSA) at University of Phoenix prepares students for a successful carrier within the accounting profession. The increasing number of multinational companies, especially, after 1990 s made it difficult for the accounting information users to analyze the financial statements. As a result, there is an increasing need to have one set of accounting standards to enhance comparability. Historically, the issuers of the financial statement where in the same country and had the same standards as the users of the accounting information. Many multinationals companies generate a significant part of their revenue from different parts of the world, and it became difficult to allocate efficiently the scarce resources without a reliable accounting system. Investors and creditors are skeptic to invest or lend money in corporations that operate on transnational markets without a good understanding of their financial positions. To enhance the understanding of investors and creditors there is a move to harmonize the accounting standards between...
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...Convergence or Adoption: From U.S. GAAP to IASB Deanna E. West American Public University Accounting 600 Professor: Dr. Kuhn Abstract This paper discusses how the Financial Accounting 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...
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... 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 or GAAP. The standards that are developed by the FASB are essential to maintaining the overall...
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...http://www.academia.edu/640120/Convergence_of_Accounting_Standards_Internationalization_of_Accounting The concept of convergence first surfaced in the late 1950s in response to World War II economic integration showing that the idea of International Convergence of Accounting Standards is not new. At first, the convergence focused on the principles used in major capital markets around the world. By the 1990s, the idea of harmonization was replaced by the notion of convergence and the International Accounting Standards Committee was formed in 1973, which was the first international standards-setting body. The FASB and the IASB have been working together toward convergence since 2002. The Financial Accounting Standards Board believes that the ultimate goal of convergence is a single set of high-quality, international accounting standards that companies would use for financial reporting. Currently, the collaborative efforts of the FASB and IASB is used to both improve U.S. GAAP and IFRS to eliminate the differences between the two. In November 2009, a joint statement showed the IASB and the FASB reaffirmed a commitment to improving IFRS and US GAAP in achieving convergence. The plan gave priority to the major Memorandum of Understanding projects for which they believe the need for improvement of IFRS and GAAP is most urgent. The projects include joint projects on financial instruments, revenue recognition, fair value measurement, and the consolidation of investment companies...
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...| Convergence of Accounting Standards | ACC 304 | | Nicole McKinney | 2/27/2013 | The word convergence refers to the process of eliminating differences in accounting standards among countries. The phrase international convergence of accounting standards refers to both a goal and the path taken to reach it. Convergence is driven by several factors, including the belief that having a single set of accounting requirements would increase the comparability of different entities' accounting numbers, which will contribute to the flow of international investment and benefit a variety of stakeholders. The efficiency and competitiveness of global capital markets rest on on the ability of financial statement preparers to communicate effectively with investors through financial reports. In spite of the global movement to accept IFRS, US adoption of IFRS is still uncertain. The majority of people believe that effective convergence to a set of globally accepted accounting standards would be beneficial to preparers, users, auditors, analysts, and standard setters. Convergence in accounting standards can require extensive and possibly costly changes to the standard-setting organization and enforcement process in the US and other countries, and will also require suitable training for management, auditors, and investors. In the United States, the Financial Accounting Standards Board (FASB) is working with the International Accounting Standards Board (IASB) to reduce or eliminate the...
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...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 future work programs to maintain compatibility. Since this time, the IASB and FASB have provided in greater detail what convergence means and...
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...International Journal of Accounting & Information Management The role of corporate governance in convergence with IFRS: evidence from China Yu Chen Zabihollah Rezaee Downloaded by UNIVERSITI MALAYSIA SABAH At 05:16 06 October 2015 (PT) Article information: To cite this document: Yu Chen Zabihollah Rezaee, (2012),"The role of corporate governance in convergence with IFRS: evidence from China", International Journal of Accounting & Information Management, Vol. 20 Iss 2 pp. 171 - 188 Permanent link to this document: http://dx.doi.org/10.1108/18347641211218470 Downloaded on: 06 October 2015, At: 05:16 (PT) References: this document contains references to 50 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 1824 times since 2012* Users who downloaded this article also downloaded: Songlan Peng, Kathryn Bewley, (2010),"Adaptability to fair value accounting in an emerging economy: A case study of China's IFRS convergence", Accounting, Auditing & Accountability Journal, Vol. 23 Iss 8 pp. 982-1011 http://dx.doi.org/10.1108/09513571011092529 Randy Moser, (2014),"IFRS and convergence in China and the USA", Journal of Technology Management in China, Vol. 9 Iss 1 pp. 56-66 http://dx.doi.org/10.1108/JTMC-12-2013-0042 Ronita D. Singh, Susan Newberry, (2008),"Corporate governance and International Financial Reporting Standard (IFRS): The case of developing countries", Research in Accounting in Emerging Economies...
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...1. Describe what accounting convergence means and assess the likelihood of the convergence being completed and implemented in the next five (5) years? Accounting convergence is a process or goal to establish one set of accounting standards that can be used internationally by attempting to eliminate the differences in the International Financial Reporting Standards (IFRS) and the US Generally Accepted Accounting Principles (US GAAP). Convergence also seeks to establish understandability amongst users and enforceable by regulators (Erchinger, Melcher, 2007). The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have been trying to implement a global acceptable standard for financial reporting since the end of 2002 onwards (Fogarty, 2011). However to this day in 2013 the convergence of both IFRS and US GAAP has yet to be completed and implemented. The likelihood of the convergence being completely finished and implemented seems possible but yet so far as both the IASB and FASB have already been trying for ten years to get it completed despite the hurdles they have endured. In November 2007 the Securities and Exchange Commission (SEC) voted 4-0 in favor of eliminating the requirements that forces foreign companies with U.S listings to reconcile their results with to U.S GAAP therefore companies with a year end of 2007 are no longer required to follow these set of principles (Fogarty, 2011). 2. Evaluate and describe the...
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...Accounting Standards Boards Cherish Malbrue Accounting 541 July 2, 2012 Bethany Kessel Accounting Standards Boards The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) began their joint commitment in 2002 to improve both generally accepted accounting principles (GAAP) and International Financial Accounting Standards (IFAS). The mission of these two boards is to try to make both methods of accounting standards as compatible as possible. The two boards are trying to come to a common denominator that will allow use for both domestic and cross-border financial reporting. The FASB and IASB are also working on a number of individual standard issues to help make FASB and IASB standards more compatible (Schroeder, Clark, & Cathy, pp. 79, 2011). The two boards were sure to have these projects completed by the end of 2011. Brief History of the Two Boards The concept of international convergence first arose in the late 1950s in response to post World War II economic integration and related increases in cross-border capital flows (“International Convergence Of Accounting Standards-Brief History”, n.d.). Convergence replaced harmonization in the 1990s, which is a high set of standards to be use in almost all the major capital markets. More than one hundred countries require or permit the use of IFAS. Since 1973, FASB has been the designated organization in the private sector...
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...The U.S. Convergence toward IASB This paper will touch on some key points, relationships, differences, and issues concerning the FASB and IASB that exist in the convergence from FASB to IASB in the U.S. They both were created to improve regulations of accounting standards, and uphold the integrity of the financial statements related to the accounting process. In the world we live in accounting standards are essential for the world economy to run smoothly. We have seen over the past decade what can happen when the standards aren’t’ used properly, or used at all. The Eron scandal, the collapse of markets in some countries like Greece, and the 2008 recession in the U.S. just to name a few examples of why they are so important. There are boards worldwide to oversee that accounting standards are being properly implemented, this paper will be concerning the two most used, the FASB, and the IASB. These boards use different accounting concepts and standards for financial reporting that guides many agencies and company’s in their day to day operations. Some examples found in the public who must rely on these standards are issuers, auditors, and any users of financial information. The International Accounting Standards Committee was from in the 70’s as the first international standards board created. Later when accounting practices were under much criticism; especially in the U.S., IASC became a self-governing international standard setter known as the International Accounting...
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