ACC563 Assignment 1 - Week 3: Assignment #1 Week 3:...

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Week 3: Assignment #1 1 Week 3: Assignment #1 ─ FASB versus IASB Strayer University Acc 563 – Advanced Accounting Theory Professor: Alfred Greenfield January 21, 2011
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Week 3: Assignment #1 2 Week 3: Assignment #1 ─ FASB versus IASB Describe the Most Significant Differences between the FASB and the IASB The most significant differences between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are presented and discussed as follows. Different Origin The United States based system, FASB, was established in 1973 as an independent organization in the private sector for establishing standards of financial accounting and reporting in the United States (Financial Accounting Standards Board , 2011). It was set up and authorized by the SEC to replace the Accounting Principles Board (APB). The FASB’s mission is to establish and improve standards for financial accounting and reporting in the United States (Schroeder, Clark, & Cathey, 2011, p.11). The IASB began operations in 2001 when it succeeded the International Accounting Standards Committee (IASC), which was formed in 1973 (Financial Accounting Standards Board, 2002). The organization is based in London, United Kingdom. Similar to the FASB, the IASB is an independent organization aimed toward creating accounting standards. The goal of IASB is to establish a global set of accounting standards by including other standard setting boards along their way. Different Organization The IASB currently has 15 full-time members out of nine countries, including the United States, are responsible for the development and publication of IFRS (International Financial Reporting Standards , 2011) . The members are chosen based on their professional competence and practical experience. The IASB deals with worldwide standards of accounting. The IASB use a six step process to set these standards that can take a long time to make an idea an
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Week 3: Assignment #1 3 accounting standard. The Financial Accounting Foundation (FAF) selects the board members of the FASB. The FASB has 5 full-time members and these members should have to give up all their affiliation or ties with their earlier firms or institutions that they have worked (Financial Accounting Standards Board , 2011). Apart from the five full time members, there are about 60 other members that are professionals drawn from various fields, such as government, public accounting and industry. GAAP vs. IFRS The main responsibility of the FASB is to establish accounting standards, which are known as generally accepted accounting principles (GAAP). The standards created by FASB govern the preparation of financial statements. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. The IASB creates accounting standards that are known as International Financial Reporting Standards (IFRS). The IASB deals with the
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ACC563 Assignment 1 - Week 3: Assignment #1 Week 3:...

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