The Financial Accounting Standards Board Accounting Essay


This paper is about two separate topics. One topic is The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are currently working on a joint venture referred to as the convergence project. The other topic is explaining how the MSA program prepares the student for a professional life within the accounting vocation

The United States has a huge influence on the accounting standards that are in use around the world. The USA follows the Financial Accounting Standards Board (FASB), which has many standards that are similar by the international accounting standards committees. The rest of the world follows the International Accounting Standards Board (IASB). The IASB is head-quartered in London, England and is an independent and privately-funded accounting standard-setter. "The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) both work toward the goal of developing and enforcing financial reporting standards for publicly held companies. The IASB headquarters are in London, United Kingdom. The FASB headquarters are in Norwalk, Connecticut." (Carty, n.d).

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The FASB is one organization that provides standardized guidelines for financial reporting. The mission of the Financial Accounting Standards Board (FASB) is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information. According to FASB, accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent and understandable financial information. Financial information about the operations and financial position of individual entities also is used by the public in making various other kinds of decisions.

The International Accounting Standards Board was established on April 01, 2001 to replace the International Accounting Standards Committee (IASC). The IASB was expected to develop International Financial Reporting Standards (IFRS), which are accounting standards circulated after 2001, and to enforce the use of each standard. The IASC operated from June of 1973 until April 01, 2001. It was established as a result of an agreement by accountancy bodies in Australia, Canada, France, Germany, Ireland, Japan, Mexico, the Netherlands, the United Kingdom, and the United States. In 1977, the International Federation of Accountants (IFAC) was established, and in 1981, the IASC and the IFAC agreed that all standards would be completely issued by the IASC. The board consists of representatives from nine different countries and is designed to achieve convergence in accounting standards around the world.

There was a joint meeting in September of 2002 where the Norwalk agreement came about. The meeting was in Norwalk, Connecticut. This meeting was between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). This was to acknowledge the commitment of both boards to establish accounting and financial reporting standards. They agreed to make the reporting standards compatible from 2002 and after. Sir According to David Tweedie the Chairman of the IASB the progress made towards converging accounting standards between IASB and the US Financial Accounting Standards Board (FASB). "He refers to the "Norwalk Agreement," the document that set the stage for the two groups to work together on how to get rid of the reconciliation between US generally accepted accounting principles (GAAP) and international standards."(Heffes,2006)

Many companies operate businesses globally, the IASB and the FASB often work together, with both entities contributing toward global accounting standards. The IASB and the FASB are working together to combine various accounting and financial reporting requirements developed by both entities into single international financial reporting standards. Reporting the same types of transaction most like likely were reported differently. The global corporations were not sure which standards they must follow. The IASB and the FASB are combining their efforts; they have now one standard concerning those types of transaction measurement and disclosure requirements.

The benefits of having one set of global accounting standards not only makes it easier for companies to follow to the proper financial reporting standards, but it also makes their financial reporting more transparent. Using one set of financial reporting standards makes the financial reporting for global companies headquartered in one country, but operating subsidiaries in a number of countries, easier to understand for investors and national governing bodies of financial markets. An example of national governing bodies of financial markets is the Securities and Exchange Commission in the United States.

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Though both the IASB and FASB are working in conjunction with one another, there are some major differences between the two entities. The FASB is a private, non-governmental division of the U.S. Securities and Exchange Commission. It receives its funding through the SEC. The IASB is a private company receiving its funding through private donors and corporations.

I think it was a great idea for the two boards to get together. More and companies have offices globally.

The MSA program prepares a student for a professional life within the accounting vocation. The world will always need "Bean Counters" so to speak. The Master's program is more in depth compared to the lower classes. These upper classes will help me understand more of what I do for a living. Even though I have taken some of the classes I will have to take, I will most likely learn more. Government and Not-for- profit accounting might have changed since I took it back in 2003. I worked for many not for profits and their accounting was more like for-profit accounting except no stocks and bonds. .

I am looking forward to taking Forensic Accounting. That is one class I have not taken. With Forensic accounting you can pick apart someone's books and see things you didn't notice before. Auditing is a class I have taken multiple times. Auditing was a requirement for my associates and again for my bachelor's degree but I keep learning from it.