International Convergence

International Convergence of Accounting Standards

Andrew Green

Acct/541 – Accounting Theory and Research

July 31, 2011

Mark Taylor

Abstract

This paper will briefly discuss the relationship between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) in the development of a Convergence Project, which is designed to create one universal set of accounting standards that companies around the world can follow. The paper will end by discussing how the University of Phoenix MSA program prepares students for a professional life in the accounting vocation. It will discuss the value of the course selection and the value of having real world instructors teaching the courses.

FASB and IASB

The Financial Accounting Standards Board (FASB) has been “the designated organization in the private sector for establishing standards of financial accounting that governs the preparation of financial reports by nongovernmental entities (FASB, 2011)”. The International Accounting Standards Committee was formed in 1973 and was the first international standard-setting body. In 2001, it reorganized into the IASB. Like the FASB which has its GAAP, the IASB has its equivalent international financial reporting standards (IFRS).

“A demand for international accounting standards arose during the 1950’s due to the economic integration and related increases in cross-border capital flows”. The FASB and IASB have been working together since the 2000’s to develop a single set of international accounting standards that would be used in all major capital markets (FASB, 2011). In 2010, the SEC issued a statement in the support of convergence and global accounting standards and will decide whether and how to incorporate IFRSs into U.S. financial reporting system (FASB, 2011). On Dec 1, 2010, the FASB and the IASB released a “convergence progress report”. In this report, they said their priority projects are on target for completion in...