Accounting Standards Board Paper

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Date Submitted: 05/03/2011 06:34 AM

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Accounting Standard Boards Paper: FASB and IASB

For many years, the accounting profession has been one that has serviced businesses by accurately providing financial snapshots and capacity projections for business, investment, financing related decisions. As is the case in every profession and industry, a checks and balances system should be implemented to keep business practices in compliance with the rules and regulations set forth by the regulatory authorities. Domestically, the Financial Accounting Standards Board (FASB) aims “to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities.” (FASB, 2011) Abroad, the International Accounting Standards Board (IASB) “are responsible for the development and publication IFRSs [or International Financial Reporting Standards]” (IFRS Foundation, 2011). These two entities exist separately, but have an overall goal of bridging the gap of how financial reporting is conducted.

The goal for global accounting standards did not come out of thin air. “The concept of convergence first arose in the late 1950s in response to post World War II economic integration and related increases in cross-border capital flows.” (FASB, 2011) The initial planning focused on reducing the amount of differences between financial reporting the major capital markets on a global level. Formed in 1973, the International Accounting Standards Committee (IASC), was the first international standard setting body. “It was responsible for developing International Accounting Standards and promoting the use and application of these standards.” (Wikipedia, 2011) Within the past decade, the IASC was replaced by the International Accounting Standards Board (IASB), and since the reorganization there has been an increase in efforts towards international convergence of accounting standards. However, it was not until the 1990s that the FASB formalizes and expands its international...