Conceptual FrameworkAgrawal et al. note that the IASB and FASB ' s respective conceptual frameworks aresimilar.58They find that the IASB identifies several user groups, but it emphasizes only thoseobjectives that are common to all users. The principal qualitative characteristics are similar tothose in SFAC No. 2.59Likewise, the IASB lists several possible measurement bases (e.g.,historical cost, replacement cost, exit value, present value) and notes that historical cost is themost prevalent basis, although it may be combined with other approaches. Even though thereare similarities between the two frameworks, differences exist; notwithstanding, they recentlycompleted their convergence project on the qualitative characteristics.The authoritative nature of the two frameworks significantly differs. Preparation of financialstatements under IFRS explicitly requires that management consider IASB ' s Framework forSAGESAGE BooksContact SAGE Publications at .SAGE Books - International AccountingPage 17 of 22
the Preparation and Presentation of Financial Statements when guidance is needed for anissue not covered by the IASB ' s pronouncements or interpretations. There is no suchrequirement in U.S. GAAP.60The U.S. conceptual framework is not part of the FASBAccounting Standards CodificationTM; it is a nonauthoritative source for determining GAAP.Several points should be stressed relative to the IASB framework. First, the document is verysimilar to and was clearly based on the original FASB document. Second, the IASB work isconsiderably shorter than the FASB instrument, even excluding SFAC No. 7, which was notpublished until after the IASC framework appeared. Third, since talks about harmonization(frequently referred to as convergence) of standards were already under discussion, the twoframeworks had to be closely integrated. It is also safe to say that the IASC genuinely wanteda theoretical document underlying the promulgation of its standards.Although not included in the Memorandum of Understanding, in 2004 the IASB and FASBinitiated a project to develop a converged conceptual framework. The resultant document is asingle framework, as was the IASB ' s original conceptual framework, not a series of conceptstatements as in U.S. GAAP. The intent of the project was to improve on the respectiveframeworks, not focus on those areas in which they already have similarity. As such, theproject asked which, if any, additional qualitative characteristics might improve the framework(e.g., high quality, true and fair view, credibility, transparency). It also asked whethermateriality is a constraint or more appropriately classified as a qualitative characteristic.61Forconvergence to be attained, the IASB and FASB need similar conceptual frameworks and theymade significant progress toward achieving that goal.
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