Chapter 8 Case 8-2
“Whither the Withering Standard Setters?”
There are a number of differences between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB). The IASB consists of 16 members with 3 part time members. The FASB consists of 5 members with no part time members. The members of the IASB board consist of 4 from Asia, 4 from Europe, 4 from North America, 1from Africa, 1 from South America, with 2 from any region in the world. This board is diversified with its members being knowledgeable in the varying fields of accounting such as the academic world, as well as those who utilize, prepare, and audit financial records. The FASB on the other hand requires that its board members be involved as a watchdog for the public. The FASB is a geographically diverse board with members who are knowledgeable in the fields of business, as well as accounting and it’s required reporting. Therefore the FASB board is made up of members from universities, corporations, accounting firms, as well as investors.
There are a number of comparisons between the IASB and the FASB. The IASB is an organization whose design was based upon that of the FASB. Therefore, the process used by both is similar in establishing accounting standards. Those appointed to either board only sit for one term of five years. The meetings of the organizations are made public knowledge and are publically held. Committees and people internal to these organizations decide where to focus the efforts of the respective organizations. Both boards conduct research of subjects presenting the positives and negatives of said, but in the IASB this is accomplished in working groups, whereas in the FASB they utilize employed professionals. When deemed necessary researched topics and findings are published by both bodies.
When proposing new accounting standards both release exposure drafts. In order to gain the insight of the larger group of components these exposure drafts are put forth and public meetings are held. In both the IASB and FASB information gathered during the exposure draft period is considered, and decisions are then made upon which standards are to be put forth. The IASB and FASB meet two times a year, align their agendas, and both find benefit in having the ability to join their efforts with each other or with another national group that establishes accounting standards.
It is self-explanatory as to why that other organizations pay much and very close attention to the coming together of the IFRS and U.S. GAAP, the works that they produce, and the influence that they have globally in national accounting standards. Considering that many national accounting standards are based upon the IFRS and U.S. GAAP it is no wonder that their convergence causes the world to pay close attention.
There are a few factors that indicate that a convergence is in the works between the IFRS and U.S. GAAP. There are many...