Running head: RELATIONSHIP OF IASB AND FASB
The Relationship of the International Accounting Standards Board and the Financial Accounting Standard Board
Accounting Theory & Research 541
The History & Relationship of the International Accounting Standards Board and the Financial Accounting Standard Board
The International Accounting Standards Board (IASB), and independent standard-setting body of the IFRS Foundation was created after the Financial Accounting Standards Board (FASB) to develop and establish universal accounting procedures and standards for both boards. In recent years however, there has been significant shifts in the relationship between both entities given various considerations. Currently, IASB and
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In September 2002 the IASB and the FASB agreed to work together, in consultation with other national and regional bodies to remove to differences between international standards and US GAAP. This decision was embodied in a Memorandum of Understanding between the boards knows as the Norwalk Agreement. Although the document does not represent a change in the boards’ convergence program, it reflects the context of the roadmap for the removal and reconciliation requirement for non-US companies that use IFRS’s and are registered in the United States. It also reflects the work undertaken by the Committee of European Securities Regulators to identify areas for improvement of accounting standards. This commitment was further strengthened in 2006 when IASB and FASB set specific milestones to be reach by 2008. Many issues must be deliberated before any major changes can be made on an international degree. An example of the features that must be contemplated in order to execute new accounting methods and practices are language, cultures, values, political and economic systems. The Convergence Project is an objective of the two groups, intended to abolish the dissimilarities between the United States’ General Accepted Accounting Practices (GAAP) and International Financial Reporting Standards (Schroeder, 2011).
The IASB and the FASB have an affiliation that could be