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Us Gaap Convergence with Ifrs

In: Business and Management

Submitted By devinehamdani
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Devine Hamdani 10/1/11
Project 1

US GAAP Convergence with IFRS

As the business world has become more global, regulators, investors, large companies and auditing firms began to realize the importance of the establishment of a single set of high quality accounting standards. With a common accounting language around the world, investors will be able to have greater comparability and greater confidence in the transparency of financial reporting worldwide. IFRS, acronym for International Financial Reporting Standards are financial reporting standards that have been adopted by International Accounting Standard Board (IASB). Increasing number of publicly held companies in many countries are now requiring or allowing the use of IFRS for the preparation of financial statement. In the United States, the Securities and Exchange Commission (SEC) have also proposed a “Roadmap” in incorporating the convergence of US Generally Accepted Accounting Principles (US GAAP) to IFRS with the help of Financial Accounting Standards Board (FASB) and IASB.
The IASB and FASB, committed to improving IFRS and US GAAP and achieving their convergence, are also committed in providing public transparency and accountability by reporting their process in achieving their goals. In 2006, the IASB and FASB began to set out their plans of completing major projects in their issued Memorandum of Understanding (MoU). These priority major projects comprises of their joint projects on financial instruments, revenue recognition, leasing, insurance contracts, the presentation of other comprehensive income, fair value measurement, and the consolidation of investment companies. Above that, the IASB will also work on the matter of improving disclosure of derecognized assets and other off balance sheet risks and also consolidations particularly in relation to structured entities.
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