Accounting Standards Boards Paper IASB or the International Accounting Standards Board and the FASB or Financial Accounting Standards Board is both related to accounting. Though the IASB and FASB have come together in most of their functions, they are still different in many aspects. When comparing their origin, the International Accounting Standards Board came into existence on April 1, 2001. The IASB can be called as the successor of International Accounting Standards Committee.
The IASB deals with the development of International Financial Reporting Standards and promotes the application of these standards. The IASB based in the UK capital of London is an accounting standard setter, which is independent and funded privately. The FASB is based in the United States and came into existence in 1973. It replaced the Accounting Principles Board (APB) and the Committee on Accounting Procedure (CAP). The FASB is a non-profit organization, which caters to the development of Generally Accepted Accounting Principles (GAAP) in the interest of the public.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) both work toward the goal of developing and enforcing financial reporting standards for publicly held companies. Though both the IASB and FASB have the goal of establishing accounting and financial reporting standards, the FASB focuses on accounting standards in the United States, while the IASB focuses on global standards.Since many companies operate businesses globally, the IASB and the FASB often work together with both entities contributing toward global accounting standards. The FASB also sets standards and rules for individual certified public accountants practicing in the United States. Having one set of global accounting standards not only makes it easier for companies to follow to the correct financial reporting standards, but it also makes their financial reporting more transparent.Using one set of financial reporting standards makes the financial reporting for global companies headquartered in one country, but operating businesses in a number of countries, easier to understand for investors and national governing bodies of financial markets.
An example of national governing bodies of financial markets is the Securities and Exchange Commission in the United States. U. S. business has become increasingly global in nature.
The growth of corporations beyond national borders has been financed with internal resources, debt and stock.Corporations wishing to issue debt or equity securities in a given country are typically subject to its financial reporting standards and legal requirements. Foreign companies that wish to issue stock on the New York Stock Exchange are subject to SEC reporting requirements and are generally expected to follow, or reconcile their financial reporting to, U. S. GAAP. The U.
S. corporations face similar requirements overseas. The need to prepare different financial statements for different countries results in additional expense and in many cases, a lack of comparability.In October of 2002 FASB and IASB jointly announced a memorandum of understanding (the Norwalk Agreement) to acknowledge their commitment to the development of high quality, compatible accounting standards that could be used to both domestic and cross border financial reporting. Both groups pledged to use their best efforts to make existing standards compatible as soon as possible, and to coordinate future projects to ensure that compatibility is maintained. Initial steps are already being taken.
Both standard setting bodies have added short term convergence projects to their agendas. The short term convergence project is intended to reduce differences between IASs and U. S. G AAP.
The IASB will deliberate the following issues: the classification of refinanced liabilities; liabilities under which the borrowing agreement has been breached; the exchange of similar assets; the method of reporting the effects of voluntary changes in accounting policies; and the treatment of financial instruments.Other areas where reporting differences are expected to be reduced include: discontinued activities; costs associated with the exit or disposal of a business; government grants; idle capacity and spoilage; depreciation on idle assets and assets held for disposal; income taxes; construction contracts; inflation accounting; joint ventures; interim financial reporting; and discontinued operations. FASAB standards for federal agencies now have the same level of acceptance as those of FASB and GASB for nongovernmental and local and state governmental entities.Because of its new stature, FASAB is an important organization to anyone with interest in the accounting profession, especially auditors of federal entities.
FASB’s convergence project with the IASB is probably just the first step toward global standards. With an ever-increasing number of clients with global operations, CPAs need to be informed about international accounting standards and how they affect the evolving standards-setting process.Today’s accounting and financial professionals must possess knowledge, experience, and a well-developed set of technical and critical thinking skills to meet the challenges of a wide range of business environments. These challenges are addressed by the Master of Science of Accountancy (MSA) program. You will be prepared for a career in auditing, tax consulting, investment banking or financial consulting.
As an MSA student you acquire the aptitude necessary to succeed at top public accounting firms and major corporations worldwide.Public and private corporations require human, financial and economic assets to be effective and productive. The MSA program equips graduate students with the academic and experiential knowledge to contribute to and influence the strategic and operational direction of organizations in an innovative economy. In a highly competitive, dynamic transnational, 21st century global environment, the diversified MSA curriculum challenges students to expand and transform the boundaries of knowledge in the workplace.
The MSA program provides the academic prerequisites for candidates who wish to take the U. S.Uniform Certified Public Accountant (CPA) examination, the Certified Management Accountant (CMA) examination and the Certified Internal Auditor (CIA) examination. The growth of cross border investing and capital flows and a growing endorsement of IAS in many parts of the world, require the FASB to become an active participant in the process of setting high quality global accounting standards.
Under the new leadership, the FASB has been dedicating significant resources at various levels to their effort. The IASB has already started to affect the FASB’s agenda including the addition of priority international accounting topics.In more cases, the FASB adds a project to its agenda that will enhance convergence. The current financial reporting crisis in the U.
S. , the new to develop better accounting standards that will be internationally acceptable, and the new EC Regulation requiring listed companies to comply with the IFRS by 2005, create a unique opportunity to converge on a simple set of high quality global accounting standards. These standards would dramatically improve the efficiency of global capital markets by lowering cost of capital, improving comparability, and enhancing governance.
