IASB And FASB Convergence Of IFRS

explanatory Essay
2767 words
2767 words

IASB and FASB Convergence to develop IFRS: An Overview
The USA exercises great influence on the existing accounting standards all over the world. The USA espouses the Financial Accounting Standards Board (FASB), which has set forth many standards that are applied by the international accounting standards boards. On the other hand, the rest of the countries of the world follow the International Accounting Standards Board (IASB), which is designed to realize convergence in accounting standards globally (IASB international, 2010) to develop International Financial Reporting Standards.
In 2001, an outline was approved by the IASB to offer direction in creating accounting standards. The outline has 4 main objectives, namely 1) defining the aims and objectives of financial statements 2) identification of features that create useful information 3) explaining the basic facts of financial statements and 4) and offering theories of capital maintenance.

The objectives of financial statements are to offer data on financial position, variations in financial position, and the organization’s financial outlook (The IASB framework, 2008).
The outline keeps two key presumptions regarding International Financial Reporting Standards (IFRS). Firstly, it is the on accrual basis, which considers that a transaction would be documented when it happened, not when the cash from that transaction is obtained. Secondly, it presumes that a company or business organization would sustain in the near future.
For several years, many countries of the world have had its own set of accounting standards and norms; nevertheless, in view of the fact many organizations turned global, the workload to report financial statements increased significantly. Not on...

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...t the FASB and the IASB converge on standards that would be best fit for the US economy as well the companies.
Indeed, the IASB has some accounting aspects in common with FASB; nevertheless, there exist more dissimilarities than similarities. GAAP and IFRS both offer remarkable accounting principles; nevertheless, the USA should continue to follow GAAP and continue to have GAAP created by the FASB.
The US companies are not expected to fully approve IFRS or the IASB, since it eliminates their control over financial standards globally and IFRS has the accounting standards that are quite different from the US standards upon which many decisions in the country have been made. Though, the SEC try to converge both the Boards and the concepts, the disparities between the two imply that it may take few years to set up a standard accounting Board that the USA would approve.

In this essay, the author

  • Explains that both fasb and iasb concurred to integrate their projects in terms of revenue, expenses, gains, and loss accounts.
  • Describes the insignificant and key differences between fasb and iasb.
  • Explains that the fasb was created by the usa in 1973, and the iasb in the uk in 2001.
  • Explains that the fasb replaced the accounting principles board (apb) and the committee on accounting procedure (cap), while the iasb substituted the international accounting standards committee (iasc).
  • Explains the fasb is a non-profit accounting body that creates gaap, while the iasb develops ifrs.
  • Explains that while gaap offers the contemporary companies an option between whether to conclude contracts in cash or shares, ifrs necessitates them to deal businesses in shares only.
  • Explains that ifrs and gaap explain equity and debt, while a fixed derivative should be detached at the conclusion of each reporting time.
  • Explains that gaap necessitates non-current display of defaulted debt if a waiver is accepted prior to the payment issue date, while ifrs needs this following the balance sheet dates.
  • Explains that gaap permits convertible debt to be registered as long-term debt, while ifrs lists convertible bonds discretely into the equity part and the debt section.
  • Explains that the iasb groups all assets in relation to their cash flows, while the fasb needs everything to be assessed at the fair value.
  • Explains that the usa has great influence on accounting standards all over the world, and the rest of the countries follow the international accounting standards board (iasb) to develop international financial reporting standards.
  • Explains that financial statements offer data on financial position, variations in financial positions, and the organization's financial outlook.
  • Explains that the usa does not recognize ifrs or iasb, though the securities and exchange commission (sec) put forward a suggestion.
  • Compares gaap and ifrs in the way they identify stock-based reimbursement. the iasb published the specific accounting norms in may 2002.
  • Explains that the present accounting standards impact the manner in which people carry out their businesses and plan for the reimbursement of taxes.
  • Explains that the fasb and the iasb signed the norwalk agreement in 2002 to develop a high quality, converging set of accounting standards. the u.s. securities and exchange commission has slowed down in its advancement towards ifrs.
  • Explains that there are conflicting views regarding the issue of global financial reporting standards.
  • Opines that the us should continue to follow gaap and ifrs, since it eliminates their control over financial standards globally.
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