...reliability in financial reporting |Abstract | |In an information orientated system of financial reporting the move from historical cost to fair value | |accounting has created numerous debates surrounding the trade-offs of the concepts of relevance and | |reliability. This article contributes to the debate by critically reviewing the current developments of | |these trade-offs to determine whether current financial reporting guidelines are appropriate to deal with | |the difficulties and uncertainties of financial reporting. The article found that the proposals of the joint| |framework discussion paper goes a long way in resolving the issues around the trade-offs of relevance and | |reliability. Changing the concept of reliability to faithful representation will not negatively impact on | |resolving the issues. Some recommendations are made to enhance the trade-off concepts. | Keywords: Faithful representation Financial reporting Framework Discussion Paper Qualitative characteristics Relevance Reliability 1. Introduction The current international move from historical cost to fair value accounting has...
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...Abstract There are many issues surrounding fair value accounting, this assignment concerns about the discussion of fair value measurement under both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB). So far, IASB and FASB have created a uniform framework for how to measure fair value for entities around the world. By publishing IFRS 13 Fair Value Measurement, the IASB established a single source of guidance under IFRS for all fair value measurements. After searching relevant sources from financial books and economic websites, some of the issues about fair value accounting have been clarified and analysed. This assignment provides a better understanding of the joint work between IASB and FASB, the definition of fair value under both standards, the relevant issue about IFRS 13 and why accounting differences exist. A. Explain the purpose of the Memorandum of Understanding between the IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB). Theoretically, A Memorandum of Understanding is a document that involved a bilateral or multilateral agreement between parties (Wikipedia 2011). In this particular research essay, the Memorandum of Understanding is a convergence process that both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB) would take steps to balanced the reciprocal...
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...the first one is the International Accounting Standards Board (IASB), and the second is the Financial Accounting Standards Board (FASB). The two boards are putting together this joint adventure to have a universal standard recognized internationally by entities for reporting of financial statements. This adventure will help to ensure that reporting of financial information is consistent globally and in the United States. The adventure will also help investors, stakeholders, the public, and financial institutions to read the financials in a clearer format. This paper will provide a brief understanding of the two boards joint adventure referred to as the convergence project. After discussing the relationship between the two boards along with the equivalents of the FASB original pronouncements, the paper will explain briefly how the MSA program prepares students for a professional life within the accounting vocation and how he or she will be able to make ethical business decisions. IASB and FASB The IASB is an independent regulatory body based in the United Kingdom, which aims to develop a set of global accounting standards (Investopedia, 2013). The IASB has 14 board members 12 are full-time and two are part-time and was established in 2001 as the successor to the International Accounting Standards Committee (answer, 2013). The FASB established in 1973, consist of seven members (Investopedia, 2013). The FASB is an independent board consisting of accounting professionals...
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...Student Name: ID Number: Student Name: ID Number: FinaNCIAL aCCOUNTING tHOERY FIN420 Assignment 1 FinaNCIAL aCCOUNTING tHOERY FIN420 Assignment 1 Case 3-8 IASB vs. FASB Conceptual Frameworks Q. Discuss the similarities and differences between the FASB and IASB conceptual frameworks with respect to the definitions of the elements of financial statements. INTRODUCTION At the October 2004 joint IASB-FASB meeting, the Boards agreed to add to their respective agendas a joint project to develop a common conceptual framework—a single framework that both converges and improves upon the existing frameworks of the two Boards. (The Boards had previously discussed a staff proposal for this project at their April joint meeting.) The Boards also agreed that the project should be divided into phases. Initially, the focus will be on objectives, qualitative characteristics, elements, recognition, and measurement. The Boards will give priority to addressing issues that are likely to yield benefits to the Boards in the short term, that is, cross-cutting issues that affect a number of their standards-level agenda projects. Therefore, the first step is to identify and prioritize those cross-cutting issues. Possible examples that the staff have suggested include the meaning and role of reliability; the definition of liability; the meaning of probable; the effect of conditions, contingencies, or other uncertainties; the unit of account; and accounting...
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...Financial Crisis Advisory Group July 28, 2009 To the Members of the International Accounting Standards Board and the US Financial Accounting Standards Board: On behalf of the members of the Financial Crisis Advisory Group (FCAG), we are pleased to present our report to the Boards about the standard-setting implications of the global financial crisis. We believe that confidence in the transparency and integrity of financial reporting is critically important to global financial stability and sound economic growth. We hope that our conclusions and recommendations will be helpful to the Boards as they work together to simplify and improve accounting standards on financial instruments and other key areas highlighted by the crisis. The FCAG will be meeting in December to review the progress that has been made. In the meantime, we are available to assist the Boards in their efforts. Sincerely, Harvey J. Goldschmid Co-chair Hans Hoogervorst Co-chair cc: Gerrit Zalm, Chairman of the Board of Trustees, International Accounting Standards Committee Foundation John J. Brennan, Chairman of the Board of Trustees, Financial Accounting Foundation Report of the Financial Crisis Advisory Group – July 28, 2009 Table of Contents Page I. INTRODUCTION _________________________________________________________________________ 1 II. PRINCIPLE 1: Effective Financial Reporting____________________________________________________ 3 Intersection of Prudential Regulation...
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...Business Research Report FASB: The Next Turn in the Road Table of Contents Executive Summary 3 Introduction 4 Research Findings 4 FASB Foundation and History……………………………………………………………………4 Impact of the New Code and Globalization………………………………………………………5 Feelings About the New Normal………………………………………………………………….7 Recommendations………………………………………………………………………8 Conclusion 8 References………………………………………………………………………………10 Executive Summary The financial crash of 1929 and the subsequent depression of the 1930’s created the desire an need for the formation of a set of standards for financial reporting and began the evolution toward present day FASB rulings. From the first set of standards it became obvious that this would not be able to be handled informally and by 1972 the FASB was formed so as to be the go to, non-governmental source for all regulations in the accounting industry. However, the formation of this body did not end the evolution or creation of regulations as they continue in the attempt to improve the transparencies of financial reports. This has, in turn, led to a rules oriented mindset that creates far more paperwork than is typically deemed necessary and creates the possibility for confusion and muddies the water. Therefore, many thought that the mission was failing and clarification of information was no longer occurring. For this reason FASB instated its codification clarification database in 2009 with the intention of...
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... |0951 8011252 | | | |rene.reimers84@gmx.de | | |Betreuer: |Andreas Weik, M.Sc. | | | | |Bamberg, 18. November 2011 | Inhaltsverzeichnis Seite Inhaltsverzeichnis I Abkürzungsverzeichnis II 1 Einleitung 1 2 Intention des IFRS 13 sowie Meilensteine in der Entwicklung 1 3 Anwendungsbereich 2 4 Bestimmung des Fair Value 3 4.1 Bewertungsverfahren 6 4.2 Fair Value Hierarchie 7 5...
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...Reporting Standards: Issues and a Suggested Model American Accounting Association’s Financial Accounting Standards Committee (AAA FASC) James A. Ohlson, Stephen Penman, Robert Bloomfield, Theodore E. Christensen, Robert Colson, Karim Jamal, Stephen Moehrle, Gary Previts, Thomas Stober, Shyam Sunder, and Ross L. Watts SYNOPSIS: This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that exhibits these characteristics. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach. Keywords: FASB; IASB; conceptual framework; accounting standards; financial reporting. JEL Classifications: M40. In 2008, the American Accounting Association’s Executive Committee asked the Financial Accounting Standards Committee ͑hereafter, the Committee͒ to develop alternative approaches to conceptual frameworks for financial reporting standards. The Committee agreed to add this assignment to...
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...for US public filings in the foreseeable • In May 2011, the SEC’s Office of future, IFRS has been affecting US the Chief Accountant published a companies for some time, primarily Staff Paper exploring one possible through engaging in cross-border method to incorporate IFRS merger-and-acquisition (M&A) into the US financial reporting activity, meeting the reporting needs system, involving an active of non-US stakeholders, and assisting Financial Accounting Standards with or monitoring of the IFRS Board (FASB) incorporating IFRS requirements of non-US subsidiaries. into US GAAP over an extended US companies are also becoming period of time (the “endorsement” increasingly aware of IFRS, as key method). Under this method, the aspects of US generally accepted FASB would remain the US stanaccounting principles (US GAAP) dard setter and potentially endorse and IFRS continue to be the focus of new IFRS into the US financial ongoing joint projects. reporting system. Additionally, the FASB would also consider existing IFRS has also been a subject of focus IFRS during a multiple-year period, by the Securities and Exchange and consider how to...
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...standards. Setting the standard on and relate to an established body of concepts and objectives, enable FASB and IASB to “issue more useful and consistent standards over time” (Essays, 2013). For any future developments or armaments on the standards, the framework will ensure the changes will be within its fundamental concepts and will not get to a personal or an inconsistent standard. ACCA has mentioned “the availability of a conceptual framework could lead to ‘principles-based’ system whereby accounting standards are developed from an agreed conceptual basis with specific objectives” (Team, 2015), which in other words, a consistency on the principle-based standards and agreed on a common ground. Without a sound conceptual framework, principle-based standards could lead to inconsistency for users internally (accounting practitioners) and externally (report readers); bias on the use of standards and standard settings, which leads to misdirection on financial statements; and the difficulty of future developments on the standard itself (not been bounded by any concepts or ideas. Conceptual framework can be seen as the “root” and the principles can be seen as the “tree”. The root has to be firm and stable in order to let the tree to grow and expand. Even the trunk grows taller and the branches spreads, it still connects to the root. 2. Why is it important that the IASB and FASB share a common conceptual framework? A: To...
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...long-lived assets, goodwill and intangible assets Financial instruments Foreign currency matters Leases Income taxes Provisions and contingencies Revenue recognition Share-based payments Employee benefits other than share-based payments Earnings per share Segment reporting Subsequent events Related parties Appendix — The evolution of IFRS Introduction It is not surprising that many people who follow the development of worldwide accounting standards today might be confused. Convergence is a high priority on the agendas of both the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) — and “convergence” is a term that suggests an elimination or coming together of differences. Yet much is still made of the many differences that exist between US GAAP as promulgated by the FASB and International Financial Reporting Standards (IFRS) as promulgated by the IASB, suggesting that the two GAAPs continue to speak languages that are worlds apart. This apparent contradiction has prompted many to ask just how different are the two sets of standards? And where differences exist, why do they exist, and when, if ever, will they be eliminated? In this guide, “US GAAP v. IFRS: The basics,” we take a top level look into these questions and provide an overview, by accounting area, both of where the standards are similar and also where they diverge. While the US and international standards do contain differences, the general principles, conceptual...
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...clear guidance from accounting standards setters. Formative efforts on the part of those standards setters have proven unsuccessful. The International Financial Reporting Interpretations Committee (“IFRIC”) initially took on this task, and issued IFRIC 3, Emission Rights. Unfortunately, considerable pressure from both the business community and European politicians, who objected to the financial statement consequences of applying that interpretation, led to its withdrawal by the International Accounting Standards Board (“IASB”) within a year of its issuance. In the US, the Emerging Issues Task Force (“EITF”) also attempted to address the related accounting issues in EITF Issue 03-14, Participants’ Accounting for Emissions Allowances under a “Cap and Trade” Program. However, it was never finalized, and ultimately removed from the EITF’s agenda. More recently, organizations have been advised of informal views from both the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) on the appropriate accounting for emissions allowances held, especially since EITF 03-14 was tabled. As a consequence, many companies remain confused about the appropriate accounting treatments under both International Financial Reporting Standards (“IFRS”) and generally accepted accounting principles in the United States (“US GAAP”). This article considers the story to date, current developments in accounting for emissions in both markets, and the respective accounting...
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...guidance from accounting standards setters. Formative efforts on the part of those standards setters have proven unsuccessful. The International Financial Reporting Interpretations Committee (“IFRIC”) initially took on this task, and issued IFRIC 3, Emission Rights. Unfortunately, considerable pressure from both the business community and European politicians, who objected to the financial statement consequences of applying that interpretation, led to its withdrawal by the International Accounting Standards Board (“IASB”) within a year of its issuance. In the US, the Emerging Issues Task Force (“EITF”) also attempted to address the related accounting issues in EITF Issue 03-14, Participants’ Accounting for Emissions Allowances under a “Cap and Trade” Program. However, it was never finalized, and ultimately removed from the EITF’s agenda. More recently, organizations have been advised of informal views from both the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) on the appropriate accounting for emissions allowances held, especially since EITF 03-14 was tabled. As a consequence, many companies remain confused about the appropriate accounting treatments under both International Financial Reporting Standards (“IFRS”) and generally accepted accounting principles in the United States (“US GAAP”). This article considers the story to date, current developments in accounting for emissions in both markets, and the respective...
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...November 16, 2011 OFFICE OF THE CHIEF ACCOUNTANT UNITED STATES SECURITIES AND EXCHANGE COMMISSION This is a paper by the Staff of the U.S. Securities and Exchange Commission. The Commission has expressed no view regarding the analysis, findings, or conclusions contained herein. TABLE OF CONTENTS I. II. Introduction..........................................................................................................................1 Methodology ........................................................................................................................2 A. Scope of the Analysis...............................................................................................2 B. MoU and Other Joint Projects..................................................................................3 C. SEC Rules and Regulations .....................................................................................8 D. General Observations and Clarifications .................................................................8 Comparison of Requirements ............................................................................................11 A. Accounting Changes and Error Corrections ..........................................................11 B. Earnings Per Share.................................................................................................13 C. Interim Reporting .........................................
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...International Accounting Standards Board (IASB) in 2001, SEC leaders have repeatedly indicated that the logical choice for globally accepted standards is the International Financial Reporting Standards (IFRS) issued by the IASB. However, in line with other large economies, such as Japan, India and China, as of June 2012 the US had not adopted IFRS.1 This paper explores when and how, and indeed if, IFRS will become the basis for the financial reporting of domestic SEC registrants in the US. Readers are encouraged to first review Erchinger’s (2012) history of the SEC’s consideration of IFRS in the US included in this forum and especially Table 1 of this article, which provides a chronology of SEC releases regarding incorporation of IFRS into the US financial reporting model. This paper complements Erchinger’s by assessing approaches recently explored by the SEC for incorporating IFRS into the US financial reporting model. A decision can lead to correct or incorrect action. However, as articulated by many SEC constituents, uncertainty associated with repeated delays and hence ‘no decision’ by the SEC is clearly not in the best interest of investors and other financial statement users, registrants, auditors and students. Furthermore, as it considers various models for incorporation of IFRS into the US financial reporting model, the SEC and its constituents must understand that only if all countries, including the US, adopt IFRS as issued by the IASB will the SEC’s pursuit of global accounting...
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