To: Ms. Albright
Subject: Similarities and differences between standard setting process of FASB and IASB Date: February 10, 2011
The FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) are making progress towards convergence in setting better accounting standards. However, there exist some differences between their standard setting processes. After weighing the pros and cons, I suggest that FASB standard setting approach would be a better direction. Major similarities between FASB and IASB:
Same organizational structure
FASB and IASB are each belongs to an organization that has four main bodies. Also, the internal structure and responsibility assignment of these organizations are basically the same. FASB and IASB are the standard setting board of the organizations. Other three parts of the organizations are there to support the standard setting process, such as selecting board members and deal with emergency issues (Kieso, et al., p7-9). In addition, both boards have members from varies industries including accounting, finance, business and academia (Virginia Law & Business Review, fall 2008, p283).
Both boards are private entities that have been assigned the role and responsibility of developing and deploying Accounting Standards (Virginia Law & Business Review, fall 2008, p284). By private, it means the standard setting process is not affected by politics. However, since the governments are also relying on standard set by these private institutions, both FASB and IASB are sensitive to politics to varies degree. Similar procedure of making rules
Despite any internal and external influences, the procedure of drafting and publishing Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are similar. Generally, the process is as follows:...