Week 1 - International Accounting

International Convergence of Accounting Standards

The need for accounting has been around for hundreds of years and has been shaped by the needs of the end users and “influenced by the environment in which it operates” (Cathey, Clark & Schroeder, 2005, p. 70). Financial statements are currently evaluated by end users who span the globe. As the economies of the world are merging, and are no longer separated by international borders, end users are becoming more sophisticated and versed in the global economies. However, the financial statements that the end users rely upon are lagging behind in uniformity and easy of comparability across international borders, making it difficult for the end users to make sound, well informed business decisions. Many companies are currently using accounting standards dictated by the accounting practices of their applicable country.

There currently exists 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). However, FASB has engaged in an international convergence project with the International Accounting Standards Board (IASB) with a goal “to remove a variety of individual differences between U.S. GAAP and International Financial Reporting Standards” (Cathey, Clark & Schroeder, 2005, p. 88).

This paper will start with a brief description of the IASB and FASB. This will be followed by a history of the relationship between the IASB and FASB. Then I will discuss the IASB equivalents for the FASB original pronouncements. In closing, this paper will explain how University of Phoenix’s Masters of Science in Accountancy (MSA) program prepares the student for a professional life within the every changing accounting field.

IASB

The IASB is the predecessor to the International Accounting Standards Committee (IASC) that was established in...