Accounting Standards Boards

With transnational financial reporting becoming increasingly prevalent, the need for agreement with accounting standards among countries also increases. This harmonization of international accounting standards is being spearheaded by the U.S. based Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). To accomplish this the FASB and IASB are coming together on a joint venture known as the convergence project, through which the creation of accounting standards for use in both domestic and cross-border financial reporting shall be developed (Schroeder, Clark, & Cathey, 2011). Currently the FASB relies on U.S. generally accepted accounting principles (GAAP) whereas the IASB issues International financial Reporting Standards (IFRS). To move towards a congruent set of accounting standards the FASB will analyze differences between U.S. GAAP and IFRS and either “(1) amend applicable U.S. GAAP literature to reduce or eliminate the difference or (2) communicate to the IASB the Board’s rationale for electing not to change U.S. GAAP” (Schroeder, Clark, & Cathey, 2011, p. 96). Conversely, the IASB will make similar judgments in regard to IFRS, amending when change is deemed pertinent and explaining rationale when change is not. These initial goals were only meant to provide short-term guidance along the way to convergence and have since been extended in the creation of a “roadmap” to convergence that will help lead to the use of International Financial Reporting Standards by U.S. issuers beginning in 2014 (Schroeder, Clark, & Cathey, 2011). To better understand this process and the authoritative boards behind it, a brief summary detailing the history of the boards themselves and a description of the FASB original pronouncements and the IASB equivalents shall be discussed. Additionally, the relationship between the FASB and IASB will be included. To end, an explanation of how the Master of Science in Accountancy prepares its...