Fasb and Iasb

FASB and IASB Convergence

R. Blaine Brumbaugh

Acc541

July 23, 2012

Herber Howard

FASB and IASB Convergence

In 2002 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working on creating a set of accounting standards that are globally accepted. First there will be a brief description about these two standard setting boards, followed by a brief history of their attempts at convergence. The final section will describe how a Master’s of Science degree in Accountancy can help prepare a person for an accounting career.

The FASB is responsible for establishing US generally accepted accounting principles (GAAP), and was established in 1973. The mission of the FASB is to “establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports.” (“Facts about FASB”) The FASB is part of a structure that is independent of other business and organizations. FASB has seven full time members that are appointed by the Financial Accounting Foundation (FAF) that can serve up to 10 years.

The IASB was established in 2001 and works to develop global accounting standards. The standards set by IASB are known as International Financial Reporting Standards (IFRS). The mission of IASB is “to develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards.” ("About The Ifrs Foundation And The Iasb", 2012) The IASB has 15 members and holds all meetings publicly.

With so many companies going global it’s important to have a single set of principles that are globally accepted. Since 2002 the FASB and IASB have been working together to merge US GAAP with IFRS. “A common set of high quality global standards remains a priority of both the IASB and the FASB.” ("Convergence Between Ifrss And Us...