Yveya J. Bryant
December 3, 2012
The historical relationship between the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) is the project of convergence. As the economic environment changes, and as international boundaries melt away, there is a need for a conceptual framework that unifies domestic and international financial reporting. The benefit would be financial statements that are used by investors that can make investing decisions even when comparing domestic and international companies. Roughly, there are 1000 international companies trading on the New York Stock Exchange (NYSE). The potential to open the market to more international trade is there if the need for reconciliation of financial statements of internal companies from international financial reporting standards (IFRS) to generally accepted accounting principles (GAAP) is alleviated.
First, in 2002, both the IASB and FASB held a meeting in Norwalk to make an agreement that both standard- setting bodies would begin the project of establishing an accounting framework that is both high- quality and compatible with use of financial reporting in the U.S. and internationally, in the interim and annually. The project is divided into short- term and long- term goals. Beginning with the short- term goals, both standard- setting bodies agreed to start with revising the pronouncements by removing differences and strengthening weakness between the two. In the long- term, for uniformity, additions will be made that should make financial reporting more universal. Other long- term goals of the convergence project is to determine funding for the foundation, to be called the International Accounting Standards Committee Foundation (IASCF), educating users of the financial statements (i.e. auditors, financial statement preparers, investors, and managers), and streamlining interactive data for international...