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Accounting Standards Boards

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Accounting Standards Boards
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ACC/541
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Accounting Standards Boards The International Accounting Standards Board (IASB) and the Financial Accounting

Standards Board (FASB) first converged in 2002 following the Norwalk Agreement

(Whittington, 2007). The convergence was inspired by the need of the boards to produce a solid

infrastructure by uniting the two frameworks represented by each board in a bid to harmonize

accounting practices worldwide (Whittington, 2007). Additionally, the convergence was also

inspired by the need to attain improvement in accounting standards by achieving completeness,

and improving coherence (Whittington, 2007). In the IASB framework for example, Bullen, and

Crook (2005) note that there were specific areas of difficulty that benefited from the

convergence. Some of these areas include the explicit meaning of what liability is, and the

distinction between equity and liability.

Joining Forces

During the FASB/IASB convergence announcement in 2002, the two boards stated that

they would work together to develop accounting standards that would be used for both cross-

border, and domestic financial reporting. They also stated that they would work toward making

their respective standards compatible, and that future work programs would be done with the

need to retain compatibility (Schroeder, Clark & Cathey, 2011).

Another development in the FASB/IASB relationship took place in 2004 when the two

bodies announced that they were working on two joint projects. The projects involved

developing “an improved and common conceptual framework” and establishing a “common,

high-quality standard for presentation of information in financial statements” (Schroeder, Clark

& Cathey, 2011, p. 79). The two projects were closely followed by an announcement by

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