Financial Accounting Standards Board Essay

The International Accounting Standards Board ( IASB ) and the Financial Accounting Standards Board ( FASB ) are two of the most of import organic structures of the Accounting/Finance field today. Though both boards work together to develop and implement fiscal coverage criterions for publically held organisations. the FASB dressed ores on the accounting criterions in the United States while the IASB sets its focal point on planetary criterions. The regulations and criterions that are set for single certified public comptrollers that pattern in the United States are besides set by the FASB.

By presenting the IASB and FASB into the MSA plan. pupils are able to derive more penetration into what concerns are required to describe and the advancement that the accounting field continues to do. The FASB was established in 1973 after the AICPA had adopted recommendation which were made by the Wheat Committee. The Wheat Committee had recommended that the Accounting Principles Board ( APB ) be eliminated and that FASB be created. The riddance of the APB and the creative activity of the FASB meant that the FASB was the board that issued accounting criterions.

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FASB’s construction is as follows: A board of legal guardians nominated by organisations whose members have particular cognition and involvement in fiscal coverage is selected. The organisations originally chosen to choose the legal guardians were the American Accounting Association ; the AICPA ; the Financial Executives Institute ; the National Association of Accountants ( The Naa’s name was subsequently changed to Institute of Management Accountants in 1991 ) . and the Financial Analysts Federation ( Schroeder etal. 2011 ) . The FASB’s mission is to make and better fiscal accounting criterions for the aid and instruction of the populace.

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The IASB was established in 2001. after wining the International Accounting Standards Committee ( IASC ) which was established in 1973. The International Accounting Standards are created by the IASB and are called International Financial Reporting Standards ( IFRS’s ) . The chief duty of the IASB is to make and publish IFRS’s. exposure bill of exchange. and O.K. readings which are developed by the International Financial Reporting Interpretations Committee ( IFRIC ) . These IFRS’s are the tantamount to FASB’s Statements of Financial Accounting Standards.

The primary difference between the two sets of criterions is. one set of criterions are established in the United States and another set of criterions are established in another state. The FASB and IASB are presently working to make a unvarying set of International Accounting Standards ( IAC’s ) . The two boards started working together to make this unvarying set of criterions in 2003. The end of this undertaking is to accomplish “compatibility of placing common. high-quality solutions” ( Schroeder etal. 2011 ) . The ground for the convergence of the two boards is to hold a specific set of accounting criterions that all states must follow.

The guidelines for the convergence of the two boards are as follows: * Convergence of accounting criterions can best be achieved through the development of high-quality. common criterions theme * Trying to extinguish differences between two criterions that are in demand of important betterment is non the best usage of the FASB’s and the IASB’s resources – alternatively. a new common criterion should be developed that improves the fiscal information reported to investors * Serving the demands of investors means that the boards should seek to meet by replacing weaker criterions with stronger criterions ( Schroeder etal. 2011 )

The primary criterions that are to be converged are six of FASB’s Statements of Financial Concepts ( SFAC’s ) : SFAC No. 1. “Objectives of Financial Reporting by Business Enterprises” SFAC No. 2. “Qualitative Characteristics of Accounting Information” SFAC No. 5. “Recognition and Measurement in Financial Statements of Business Enterprises” SFAC No. 6. “Elements of Financial Statements” SFAC No. 7. “Using Cash Flow Information and Present Value in Accounting Measurements” ( Schreoder etal. 2011 )

Seven of IASB’s Framework for the Preparation and Presentation of Financial Statements are besides portion of the transition: 1. The aim of fiscal statements 2. Qualitative features of fiscal statements 3. The elements of fiscal statements 4. Recognition of the elements of fiscal statements 5. Measurement of the elements of fiscal statements 6. Concepts of capital and capital care ( Schroeder etal. 2011 ) The criterions mentioned above are the criterions that appear to hold the most commonalty which would look that there would be fewer obstructions.

However ; a prevailing discrepancy is the sum of item which is contained within the two models. While the convergence of the two boards will be hard. acknowledging the commonalties between the models is the first measure in doing certain the convergence goes through swimmingly. Not merely is it of import to unify the two different sets of criterions. but it is besides of import that the two boards work together to construct onto the current set and set up extra criterions that organisations are required to follow.

The Maestro of Science in Accountancy ( MSA ) plan prepares pupils for a professional life within the accounting career by presenting pupils to the criterions set by the FASB and the IASB. “The ( MSA ) provides the comprehensiveness of cognition for the professional comptroller. Students master the theory and rules that frame a broad scope of jobs and issues encountered in the accounting profession” ( University of Phoenix. 2011 ) . The pupils are able to travel in deepness with the boards and detect how the full accounting system works.

By presenting the functionality of the FASB and the IASB. the pupils are able to understand the importance of following GAAP. By understanding GAAP and cognizing the relationship between those rules and the IASB and FASB. the pupils will hold the cognition to execute the occupation and understand why the IASB and FASB set the criterions that they do. The IASB and FASB are two really influential boards within the accounting field. The criterions that these two boards have established and enforced have paved the manner toward a individual set of criterions between all states.

Having a individual set of criterions will let investors to see fiscal studies for all organisations around the universe and know that the information is being reported utilizing the same set of criterions. It is of import to the future success of any organisation that its current and future employees are up to day of the month on all of the regulations and ordinances that are portion of the accounting calling. The MSA plan allows pupils the chance to derive the cognition of any current and future regulations that the boards have established.

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