Norwalk Agreement

Question 1:

The IASB-FASB Norwalk agreement was initiated in September 2002, where the FASB and the IASB acknowledged their commitment to the development of excellent accounting standards that could be used for both domestic and cross-border financial reporting (FASB, 2008). The IASB and FASB decided that the Norwalk Agreement would make the existing financial reporting standards fully compatible, coordinate the future work programs and undertake short-term project aimed at removing differences between U.S. GAAP and IFR’s (FASB, 2008). The meeting had both the IASB and FASB agree to establish broad tactics. The main goal of the Norwalk agreement was to eliminate any differences in standards globally (FASB, 2008).

There were several milestones for the FASB-IASB Roadmap Convergence Project, which included:

1) Improving Specific Accounting Standards

2) Improving the Structure and Funding of the IASB

3) Facilitating the use of interactive data (XBRL) under IFRS

4) Updating the Education and Licensing of U.S. Accountants

5) Evaluating the early adoption experiences of a limited group of companies

6) Timing of future rulemaking

7) Sequencing of companies required to use IFRS (FASB, 2008).

Question 2:

Relevance, reliability and comparability are the most important characteristics of accounting information as described by IASB’s Framework. For accounting information to be relevant, it must be able to make a difference in a user’s decision. The information provided must allow people to understand the company’s past, present and future (FASB, 2008). Relevant information must provide the user with feedback that confirms what the user already knows about the financial condition of the company (FASB, 2008). The accounting information should also be reliable so that it allows users to see an accurate picture of the financial condition. Information contained in the financial statements must be free of errors and complete for it to be reliable. If users are only...