...Relationship between the IASB and the FASB ACC 541 Relationship between the IASB and the FASB The United States plays an enormous influence on the accounting standards set forth throughout the world in the global economy. The United States follows the Financial Accounting Standards Board (FASB) which has created a large number of accounting standards that are interpreted and accepted by international companies and by the International Accounting Board (IASB). The IASB plays a similar role like the FASB for the rest of the global economy. The IASB is located in London, England and is an independent, privately funded accounting standard-setter. The IASB board consists of members from nine different countries with the IASB’s sole purpose to ‘achieve convergence in accounting standards throughout the world’ (Cellucci, 2011). The IASB and FASB have been collaborating since 2002. This collaboration was derived to create a convergence of the United States Generally Accepted Accounting Principles (GAAP). The convergence project started when the two organizations met during a joint meeting in Norwalk, Connecticut on September 18, 2002. The two board’s goal for the convergence project was for developing a high-quality compatible accounting standards that can be used for both domestic and cross-border financial reporting. They also promised to use their best efforts to make their existing financial reporting standards compatible as soon as practicable and to coordinate their...
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...In 2002 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) met and issued the Norwalk Agreement where they both agreed to develop of high quality accounting standards. Since that time the FASB and the IASB have been working on joint projects a.k.a convergence projects designed to improve both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), eliminate differences between them, and ultimately make the standards fully compatible. In 2010, to increase efficiency the boards decided to focus on the priority projects. Two of those projects, fair value measurement and statement of other comprehensive income, are poised for release. Now, the “big three” remain—financial instruments, revenue recognition, and leases. The IASB is also working to its monster project on insurance contracts, with the FASB closely engaged in the discussion. Therefore, bellow is the list of the active joint FASB/IASB projects according to current technical plan on the fasb.org website: - Accounting for Financial Instruments (Updated November 10, 2011): • Classification and Measurement (Updated November 10, 2011); • Impairment (Updated November10, 2011); • Hedging (Updated November 10, 2011). - Revenue Recognition (Exposure Draft issued November 14, 2011); - Leases (Updated November 15, 2011); - Balance Sheet – Offsetting (Updated August 15, 2011); - Consolidation: Policy and Procedures (Exposure...
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...Standards Board (IASB) to independently develop and establish a single set of accounting procedures for international business. Since the reorganization of the IASB, the use of these international financial reporting standards (IFRSs) have been required or permitted in over 100 countries, including the European Union ("What Have IASB And FASB Convergence Efforts Achieved?", 2013). The IASB aims to make the entire world follow guidelines for financial reporting to make use and comparability of financial reports more consistent across all geographical areas. The Financial Accounting Standards Board (FASB) is the independent body that is responsible for the creation of GAAP. The board is the standard setting body in charge of standards for nongovernmental companies operating in the United States. Since 2002, the IASB and FASB have been working together to improve and converge U.S. GAAP and IFRS. The United States is not the only country working toward convergence, as of 2009, Japan and China were both working toward convergence of IFRS as well as their accounting standards. In February 2010 the Securities Exchange Commission (SEC) issued statements of support of the convergence in IFRS and U.S. GAAP. The FASB intends to analyze each of the differences within the scope and either (1) amend applicable U.S. GAAP literature to reduce or eliminate the difference or (2) communicate to the IASB the Board’s rationale for electing not to change U.S. GAAP. Concurrently, the IASB will review IFRS...
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...Group 1: Huilin Zang, Yixue Liu, Yinghui Ma Dr. Hassan R. HassabElnaby ACCT 6190-001 Sep. 6, 2015 FASB Proposes to Clarify Revenue Recognition Standard By Michael Cohn on August 31, 2015 After the International Accounting Standards Board (IASB) published a draft proposing changes in Revenue Recognition Standard on July 30, 2015, the Financial Accounting Standards Board (FASB) has also issued a similar proposed accounting standards update to clarify how to determine whether an entity involved in contract is a principal or an agent under the new revenue recognition standard. We found a news article written by Michael Cohn that discusses this recent FASB’s agenda in details. The proposed update will not change the principle part of new revenue recognition standard, but will clarify the implementation guidance on principal versus agent consideration. In the new revenue recognition standard, it points out when another party is involved in providing goods or service to customer, the entity is required to determine the nature of its promise. The determination will base upon whether the entity controls the good or the service before transferring to the customer. Specifically, if control of the goods or service belongs to the entity, the entity is a principal. On the contrary, the entity is an agent. There are some implementation issues, however, during this determination process....
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...Revenue Recognition: Where it Will Take Us By Robert Bloom and Jacob Kamm Financial Executive • SUMMER 2014 FINANCIAL REPORTING Since 2008, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have collaborated on a converged revenue recognition standard. Current U.S. Generally Accepted Accounting Principles (GAAP) standards related to revenue recognition are essentially rules-based, containing over 200 specific requirements related to revenue recognition. In FASB's news release of May 28th, Chairman Russell Golden stated "the [new] revenue recognition standard represents a milestone in our efforts to improve and converge one of the most important areas of financial reporting. It will eliminate a major source of inconsistency in GAAP, which currently consists of numerous disparate, industry-specific pieces of revenue recognition guidance." The wide-ranging converged standard eliminates detailed industry-specific codification contained in GAAP and streamlines revenue recognition guidance by superseding numerous standards issued by the FASB, the Securities and Exchange Commission (SEC), the Emerging Issues Task Force (EITF), and the American Institute of Certified Public Accountants (AICPA). The converged revenue recognition standard acts as a roadmap on how standard setters will approach other issues, including leasing. SUMMER 2014 • FinancialExecutive Fundamental to the new standard is that revenue...
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...of the project. This paper also details how the completion of the MSA program prepares students for a professional life within the accounting vocation. The globalization of the business environment over the last decade has brought about the importance of transnational financial reporting. Users of this information must be able to understand not only the accounting principles used by the company, but the language of the country where they reside, and the currency used in preparation of the financial statements. “If investors and creditors cannot obtain understandable financial information about companies that operate in foreign countries, they are not likely to invest in or lend money” (Schroeder, Clark & Cathey, 2011). The result is a move by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonize and eventually converge accounting standards commonly used in different countries. History of the relationship between the FASB and the IASB The IASB was formed in 1973 and is based out of London, England. They develop and enforce financial reporting standards for publicly held companies. The first efforts to harmonize domestic and international financial reporting standards (IFRSs) focused on “reducing differences among accounting principles used in major capital markets around the world” (FASB, 2012). Starting in the 1990s, convergence of financial standards replaced the notion of harmonization. Convergence focused...
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...“Discuss and explore issues surrounding the recognition of elements in financial statements” Contents Title: 3 Introduction & Objectives 3 Definitions 5 Recognition 5 Measurement 6 Discussion 6 Revenue Recognition (IAS 18) 6 Property, Plant and Equipment (IAS 16) 8 Xerox Revenue Recognition Scandal 9 Recognition in the Annual Statements 10 Conclusion 13 Bibliography 14 Appendices 17 Appendix 1 – Standards from IASB 17 Appendix 2 – Proposed plan for FASB and IASB 18 Appendix 3 – TUI Travel Plc Annual Statement 21 Appendix 4 – Thomas Cook Annual Statement 27 Appendix 5 – PSA Peugeot Citroen Annual Statement 31 Appendix 6 – Daimler AG Annual Statement 37 Appendix 7 – Xerox Annual Statement 42 Title: Discuss and explore issues surrounding the recognition of elements in financial statements Introduction & Objectives Accounting has many elements to producing an annual statement each fiscal year; these different elements have regulations in which organisations have to abide by. Regulations have three categories; legislation, accounting standards and stock exchange regulations (Melville, 2008). Legislation can differ from country to country, which is the same for accounting standard board as each country has individually developed their own standards (Accounting Standards Board for the UK, also, International Accounting Standards Board that is trying to consolidate standards, which can be accepted globally). Attempts by...
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...conceptual framework project that is in the process of being formulated. The history of the FASB and the different responsibilities it takes on itself regarding the conceptual framework and other issues are mentioned in the research results. The IASB and many of the elements of financial statements are defined within the paper. The joint project between the FASB and IASB is researched and the process it is currently going through on its way to completion is written out in detail. The research paper covers all of these topics for the purpose of informing and educating others. The underlying principles and objectives of financial accounting and reporting that guide and direct the Financial Accounting Standards Board (FASB) in setting Generally Accepted Accounting Principles (GAAP) are collectively referred to as the conceptual framework. Although the conceptual framework is not regulatory by nature, it does act as the basis for the laws and rules that are set. It is in place in order to assist in the creation of consistent standards across the board. It lays out the objectives of financial accounting and reporting so that changes to GAAP will be sure to further those stated objectives. The seven Statements of Financial Accounting Concepts (SFACs) issued by the FASB comprise the conceptual framework in written form. Currently, the FASB is partnering with the International Accounting Standards Board (IASB) to create a joint conceptual framework that will be applied internationally. Because...
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...25, 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by organizations that own the assets leased by the lessee—also known as lessor accounting— will remain largely unchanged from current Generally Accepted Accounting Principles (GAAP) (Topic 840 in the Accounting Standards Codification). “The new guidance responds to requests from investors and other financial statement users for a more faithful representation of an organization’s leasing activities,” stated FASB Chair Russell G. Golden. “It ends what the U.S. Securities and Exchange Commission and other stakeholders have identified as one of the largest forms of offbalance sheet accounting, while requiring more disclosures related to leasing transactions. “The guidance also reflects the input we received during our extensive outreach with preparers, auditors, and other practitioners, whose feedback was instrumental in helping us develop a cost-effective, operational standard,” added Mr. Golden. Why Did the FASB Embark on a Project to Improve Financial Reporting...
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...FASB VS. IASB - Convergence Project Shenita Baker ACC541 November 15, 2011 Delphine Wolsker FASB VS. IASB - Convergence Project The Financial Accounting Standard Board (FASB) is located in the United States and was formed in 1973 as a private sector to establish guidelines for financial accounting. These standards command the arrangement of financial reports by nongovernment bodies. The Financial Accounting Standard Board has only 5 members. The FASB standards are known by The American Institute of Certified Public Accountants and the Securities and Exchange Commission. The Financial Accounting Standard Board encourages participation, stakeholder’s outlook, and the attention by the Financial Accounting Foundation’s Board of Trustees. The FASB also controls the FASB Accounting Standards Codification which acts as the connection of valid standards of accounting and reporting. The International Accounting Standards Board (IASB) is a self-sufficient group that contains 15 members located in London. The International Accounting Standard Board ha experience in auditing, preparing, and using financial reports. The IASB also help decide accounting guidelines . The IASB is part of the IFRS foundation came about in 2001. The board is funded by major accounting firms and private financial institutions. The International Accounting Standard Board and the Financial Accounting Standards Board are currently working on a joint venture known as the convergence...
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...Introduction Revenue is defined in IFRS as “the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants”. The principles for recognising revenue are clarified by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) when both of the boards have affiliated. The boards are forming a new model to improve financial reporting by providing clearer guidance on when an entity should recognise revenue, and by reducing the number of standards to which entities have to refer. History of Australia’s policy before the adoption of IFRS In July 2004, the AASB 118 was issued. AASB 118 Revenue is equivalent to IAS 18 of the same name as issued by the International Accounting Standards Board. AASB 118 has a specific purpose which was to recommend the accounting treatment of revenue from certain types of transactions. Entities are allowed to practice the standard for yearly reporting periods which begins on or after 1 January 2005. Paragraphs 9 and 30 were amended by AASB 2007-2 and was applicable to annual reporting periods on or after 28 February 2007, whereas AASB 2007-4 amended paragraph 21 and was applicable from 1 July 2007; both of which considers early adoption from 1 January 2005. Amendments regarding the disclosure of information about segment assets in AASB...
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...Board (IASB) and the Financial Accounting Standards Board (FASB) are working on a joint venture known as the Norwalk Agreement that will most likely affect current and future individuals within the accounting field. Discussed within is the relationship between the IASB and FASB, the IASB equivalents of the original FASB pronouncements, and how a Master’s of Science in Accountancy program can prepare a student for a professional life within the field that will likely be affected by both boards. The History and Relationship of the IASB and FASB In 1973 both the FASB and International Accounting Standards Committee (IASC) were formed. FASB was created with the mission to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities providing decision-useful information to investors and other users of financial reports (Financial Accounting Standards Board, n.d.). The IASC began as the first body to set international standards and in 2001 the IASC became independent and further known as the IASB. Since 2001 the IASB has issued multiple International Financial Reporting Standards (IFRSs) that are currently permitted or required for more than 100 countries. In 2002 FASB and IASB began working with each other to improve and converge U.S. generally accepted accounting principles (GAAP) and IFRS (Financial Accounting Standards Board, n.d.). The partnership became known as the Norwalk Agreement and together FASB and IASB...
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...contents The heart of the matter 2 US financial reporting will change significantly within the next several years An in-depth discussion 4 Examining the implications IFRS affects US businesses in multiple ways What this means for your business 6 Anticipate and manage the change What companies can and should do now October 2012 The heart of the matter US financial reporting will continue to change over the next several years Although US companies will not when, and how IFRS might be be permitted to use International incorporated into the US financial Financial Reporting Standards (IFRS) reporting system. 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...
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...Recent Activities at the FASB Presentation Transcript 1. Recent Activities at the FASB Corporate Reporting and Governance Conference California State University, Fullerton September 2005 Katherine Schipper, Financial Accounting Standards Board The views expressed in this presentation are my own, and do not represent positions of the Financial Accounting Standards Board. Positions of the Financial Accounting Standards Board are arrived at only after extensive due process and deliberation. 2. Overview Financial reporting topics Exposure draft, Business Combinations (joint with the IASB) Exposure draft, Consolidated Financial Statements, Including Accounting and Reporting of Noncontrolling Interests in Subsidiaries (a replacement of ARB 51) Fair value measurement Proposals for optional fair value measurements Exposure draft, Accounting for Uncertain Tax Positions, an interpretation of SFAS 109 Performance reporting Share based payment (SFAS 123R) 3. Joint IASB-FASB project on business combinations Intent => replace SFAS 141 and converge with international standards Will include mutual enterprises Will include acquisitions of businesses through means other than a purchase of net assets or equity interests A separate project is addressing business combinations involving not-for-profit organizations General principle: recognize assets acquired and liabilities assumed in a business combination at fair value Exceptions : income taxes, benefit plan obligations, operating...
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...Introduction Financial statement presentation Interim financial reporting Consolidations, joint venture accounting and equity method investees Business combinations Inventory Long-lived assets Intangible assets Impairment of 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...
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