Harmonization Fasb Iasb

The Harmonization of International Accounting Standards

Mainstreaming a global accounting language and culture has been an ongoing journey. While accounting concepts are constant in theory, in practice these are applied and interpreted differently by investors and other users of financial reports. Hence, the Financial Accounting Standards Board (FASB) has been exerting efforts to establish and improve comparable global accounting standards in order to lay down a common ground for different investors and institutions to work, compare, and improve their financial reports and analyses (FASB, n.d.).

By working with different institutions such as the International Accounting Standards Board (IASB), the FASB continues to develop and implement such standards in order to reach salient objectives, such as the improvement of financial reporting of investors on US capital markets, reduce differences among standards used by non-US investors and financial institutions, and come up with high quality Generally Accepted Accounting Principles (GAAP) standards.

FASB AND IASB CONVERGENCE EFFORTS

International convergence of accounting standards can be traced back in the late 1950’s after the “World War II economic integration and related increases in cross-border capital flows” (FASB, n.d.). At first, a harmonization project was focused on, that was only to “reduce differences among accounting principles used in major capital markets around the world” (FASB, n.d.). It was in the 1990s that the convergence project started, which focused on the development of a unified set of high-quality international accounting standards, so they can be useful to at least all major capital markets across the globe (FASB, n.d.). At this time, it was the International Accounting Standards Committee (IASC) that set international accounting standards. It was only in 2001 that the IASC was reorganized to become an independent international standard setter, and became the IASB.

The efforts of both...