FASB versus IASB

FASB versus IASB IASB stands for International Accounting Standards Board, while FASB stands for Financial Accounting Standards Board. These two bodies play a major role in setting the pace for internationally acceptable accounting policies. The two boards are among many organizations of this nature. This report focuses on the differences of the two boards and also their respective roles.Advertising We will write a custom report sample on FASB versus IASB specifically for you for only $16.05 $11/page Learn More Differences between the FASB and the IASB IASB just came into existence recently as a replacement for International Accounting Standards Committee (IASC). The replacement was induced by members of international financial markets because they wanted to bring reforms into the regulatory board. The reforms took place in 2001 which resulted in the formation of IASB. The new board incorporated governments from all parts of the world as long as they were willing to become i ts member. The major role of IASB is to provide accurate and comprehensive and applicable international financial reporting standards (IFRS). In addition, the same board is supposed to encourage its members to adhere to these standards (Pounder, 2009). It is the European commission that pushed for the establishment of internationally recognized accounting standards. The commission found these standards to be necessary in order to prevent blue collar crimes among companies in European Union. The commission ordered all publicly owned organizations to forward their financial records that adhered to the standards of IFRS. The deadline for submitting the records was at the beginning of 2005. IASB set out to guide its members on how to ensure their records adhered to the expectations of IFRS. FASB is based in the US and it partners with IASB, which is situated in London. These two bodies are very closely related because they exist in the same field. Experts from both boards realized that a crisis could result from the clash of the rules set by the two bodies. With this in mind FASB has been advocating for the introduction of universally acceptable accounting standards, such as the GAAP because the universal standards would not be limited to certain areas and thus there would be no conflict of standards. Conceptual Framework of the IASB and FASB The IASB board comprises of fourteen board executives who reside in nine nations. These executives are professionals who are knowledgeable in accounting. The members decided to allocate seats at random and evenly to make sure all the members have equal say on how the board is run.Advertising Looking for report on accounting? Let's see if we can help you! Get your first paper with 15% OFF Learn More IASB is headquartered in London and its operations are financed by various financial institutions from all over the world. Zyla (2009) argues that the major similarity between these bodies that is the IASB a nd FASB is that they are both found in the accounting field. However, their differences outweigh the similarities. FASB is situated in the US and was established in 1973 as a successor of Accounting Principles Board (APB). There are several suggestions on how financial tools are presented in both standards. The two standards argue that financial tools that are as a result of amortized expenses will still be presented in the same manner as possible .FASB was of the idea that a new fair value be introduced. The net computation will be retained although some members are of the opinion that a new statement should be introduced. They feel that the new statement should be used to present all earnings. Of late FASB has been trying to utilize the availability of one model hence the others become irrelevant to it. The appropriate model is used to evaluate the mutilation of a financial tool. During the evaluation of financial mutilation an organization is allowed to include its present, past and future events that could have caused the mutilation. Coherence and Application of the Standards According to their framework, the two standards are coherent and applicable in their own sense. Though, it may be thought that IASB is better because of its late existence in the accounting field, replacing old rules with new ones. In as much the two standards have been trying to meet. The latest events suggest that they have been going apart rather than uniting. FASB presents one integrated statement that incorporates tools from various sections to make one statement. On the other hand IASB presents isolated statements at different intervals. In IASB model the losses are accounted for before they actually happen. This is done by analyzing the forth coming events to establish whether they can result in loss and if so that loss is included in the statement. In contrary to that FASB acknowledges only the losses that have already been experienced. The suggestions that are presented under FASB imply that the statement of an organization concerning its stand will be transformed unlike in IASB where there are no chances of such alterations. Previts (2008) explains that the suggestions made by these two boards imply that they are trying to outsmart each other. This is because they are aware that the body that brings the most compatible changes is most likely to be retained as the successor of forthcoming standards. The above stated standards are supposed to be applied simultaneously with national standards in respective countries. Though the internal standards may vary from one country to another the international standards are meant to ensure that there is universal accounting culture that is recognized in all parts of the world.Advertising We will write a custom report sample on FASB versus IASB specifically for you for only $16.05 $11/page Learn More IASC and FASB As much as the standards share some aspects in their conceptual framework, th ere is no possibility that IASC will replace FASB. IASC was replaced by IASB, meaning that its line of operation is developing Financial Reporting Standards as outlined in the previous section. Besides, the framework of IASC is different from that of FASB. In essence, the effectiveness of these standards is influenced by a nation’s accounting ethics and also the business practices plus the laws of the country in question. This is because these principles could contradict the elements of accounting in a given country. Therefore, each country should check its internal standards before referring to international standards. This is because the internal standards are best suited for internal organizations while international standards are best suited for organizations that operate beyond national boarders. References Pounder, B. (2009). Convergence Guidebook for Corporate Financial Reporting. New Jersey: John Wiley Sons. Previts, G. (2008).Research in Accounting Regulation, San D iego, CA: Elsevier. Zyla, L.M. (2009).Fair Value Measurements: Practical Guidance and Implementation. New Jersey: John Wiley Sons.