Relationship Between the Iasb and Fasb

Relationship between the IASB and the FASB

Pamela Jefferies

ACC541

September 20, 2010

Christine Errico

Abstract

The International Accounting Standards Board (IASB) was formed after the Financial Accounting Standards Board (FASB) with the intent of creating one set of accounting standards and procedures for both boards. Their relationship is not always smooth, but they both have a common goal of converging the accounting standards globally. Overcoming barriers such as language, culture, economic development, and political environment has made the process difficult. The IASB and FASB have continued to work on short term goals as agreed upon at the Norwalk Summit, which was held in Norwalk, Connecticut, on September 18, 2002 (Business Wire, Tues).

Relationship between the IASB and the FASB

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have a relationship described as formable; always changing. Many factors have to be considered before any substantive changes may be made on a global scale. Some of the factors that have to be contemplated as new accounting methods and practices are implemented are the countries language, cultures, and values, political and economic systems. The Convergence Project is a goal of two entities, aimed at eliminating the differences between the United States General Accepted Accounting Practices (GAAP) and International Financial Reporting Standards (Schroeder, Clark, & Cathey, 2005). The individual history of the IASB and the FASB should be reviewed first to understand the history between the two organizations.

Individual History

In 1973, the Financial Accounting Foundation (FAF) formed the FASB to create and correct practices of financial accounting and reporting for nongovernmental businesses. This happened because of the criticism of the Accounting Principles Board (APB), who in turn created two committees, The Wheat Committee and The Trueblood Committee....