Accounting Standards Boards Paper

Financial accounting is influenced by the environment in which it operates. Nations have different histories, values, cultures, political and economic systems and they are also in various stages of economic development. These national influences interact with each other and, in turn, influence the development and application of financial accounting practices and reporting procedures (Schroeder, Clark, & Cathey, 2005).

Financial statements are currently evaluated by end users who span the globe. As the economies of the world merge and are no longer separated by international borders, stakeholders are becoming more sophisticated and versed in the global economies. However, the financial statements that the stakeholders rely upon are lagging behind in uniformity making it difficult for the stakeholders to make sound, well informed business decisions. Many companies are currently using accounting standards dictated by the accounting practices of their applicable country.

Currently there is a push for international accounting standards to be adopted by all countries to address this problem. The United States currently follows generally acceptable accounting principles (GAAP) as established by the Financial Accounting Standards Board (FASB) whereas the rest of the world follows standards set by the International Accounting Standards Board (IASB).

Since 1973, the Financial Accounting Standards Board (FASB) has been the designated body charged with the task of establishing standards of financial accounting that governs the preparation of financial reports by nongovernmental entities in the United States called the Generally Accepted Accounting Principles (GAAP). The Securities and Exchange Commission (SEC) requires all public companies to follow these standards. These standards are important to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, and understandable financial information...