History of the Financial Accounting Standards Board and the International Accounting Standards Board

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Accounting Standards Boards

University of Phoenix

Accounting Theory and Research ACC541

The history of the Financial Accounting Standards Board and the International Accounting Standards Board
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are currently working together on a short-term international convergence project to remove a variety of individual differences between United States Generally Accepted Accounting Principles ( U.S. GAAP) and the International Financial Reporting Standards (IFRS) (Schroeder, Clark, & Cathey, 2005). U. S. GAAP are the laws of accounting in the United States. They govern how accountants measure, process, and communicate financial information about companies to the majority of Americans (Horngren, Harrison, Jr., & Bamber, 2005). Similarly, IFRS are principles, standards, interpretations, and the framework adopted by the IASB, stating how particular types of transactions and other events should be reported in financial statements  (Investopedia, 2010).

The convergence project between the Financial Accounting Standards Board and the International Accounting Standards Board will make it easier to read and interpret financial statements from almost any country in the world  (Clay, 2007). Currently, if a company is issuing financial reports to users in foreign countries, they may take one of several different approaches: A.) send the same set of financial statements to all users (domestic or foreign); B.) translate the financial statements sent to foreign users into the language of the foreign nation's users; C.) translate the financial statements sent to foreign users into the foreign nations language and currency; D.) prepare two sets of financial statements, one using the home countries language, currency, and accounting principles and the second, using the language, currency, and accounting principles of the foreign country's users; E.) prepare one set...
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