Financial and International Accounting Standards Boards

The IASB was formed in 1973, originally named the International Accounting Standards Committee, IASC to shape accounting standards internationally (Cathey,2011a). The organization is comprised of associations of professional accountants who work together to create pronouncements in the presentation of financial statements (Cathey, 2011b). The FASB replaced the prior standards board by the AICPA in 1973 (Cathey, 2011a). The priority of the FASB is to provide standards to be considered for the public interest and protection of investors within the United States (FASB, a). These standards are collectively known as the Generally Accepted Accounting Principles, GAAP (FASB, a).

As the number of international businesses has increased it was imperative for the IASB and FASB to come together in their convergence program to try to merge the way the financial statements are presented for multinational users to use and understand. The goal was three-part, first, the short-term International Convergence Project, second, the Norwalk Agreement, and third, the Roadmap to Convergence (Cathey, 2011b). In May 2014, with the passing of the ASC Topic 606 for the FASB and the IFRS 15 the two boards are, “largely converged” with regard to revenue contracts to customers (Rosenhouse). Determining how a country recognizes revenue has been a long standard issue between the IASB and FASB. Beginning in 2008, the Boards published for public comment early reviews about the revenue recognition in contracts for customers and continued to publish for public comment about each year after that updated commentary (FASB,b). The reason this was so crucial was because the standards of GAAP and IFRS were very different and had deficiencies among themselves. The combined standard was able to a.) remove inconsistencies and weaknesses b.) provide a structure for handling issues c.) approve comparability of financial documents between borders d.) improve disclosure requirements and e.) simplify...