Question

Financial Reporting CaseIFRS2-5 As discussed in Chapter 1, the International Accounting Standards Board(IASB) develops accounting standards for many international companies. The IASB also has developed a conceptual framework to help guide the setting of accounting standards. While the FASB and IASB have issued converged concepts statements on the objective and qualitative characteristics, other parts of their frameworks differ.

Instructions

Briefly discuss the similarities and differences between FASB and IASB conceptual frameworks as related to elements and their definitions.

Short answer

The International Accounting Standards Board (IASB) is the one which deals with the development of international financial reporting standards and promoting the application of these standards while Financial Accounting Standards Board (FASB) is non profit organisation which deals with development of Generally Accepted Accounting Principles (GAAP) in the interest of public.

Step-by-step solution

International Accounting Standards Board (IASB)&Financial Accounting Standards Board (FASB) - SIMILARITIES:

Both IASB and FASB are independent, private sector bodies working to develop and enforce financial reporting standards for publicly held companies. They both held in setting of standards to private and public companies regarding reporting of financial statements.

International Accounting Standards Board (IASB) & Financial Accounting Standards Board (FASB) - DIFFERENCES:

• IASB deals with setting and promoting the application of International financial reporting standards while, FASB is non profit organisation which deals with setting of Generally accepted accounting principles (GAAP)

• IASB came into existence on April 1,2001 while, FASB came into existence in 1973.

• IASB is based in London and FASB is based in US.

• IASB is called the successor of International Accounting Standards Committee while FASB replaced the Accounting principles board (APB) and the Committee on Accounting Procedure (CAP)

• IASC(International Accounting Standard Committee) with a mission to promote convergence on a single set of high quality, understandable, and enforceable global standards. FASB establishes financial accounting and reporting standards for specific public and private companies and for not for profit organisations

• IASB roles are: It handles all technical matters concerning IFRS:

1. Developing and pursuing IFRS`s technical agenda, subject to consultation requirements with specific selected trustees and the public
2. Preparing & issuing IFRS and exposure drafts following due process.
3. Approving & Issuing interpretations developed by IFRS Interpretation Committee

FASB roles are: Its priority is to improve financial reporting for the benefit of investors and other users of financial information, mainly in US capital markets. They achieve it by:

1. Striving to achieve the highest quality standards known as GAAP
2. Providing users with financial statements and information that is clear, useful and relevant to their needs
3. Weighing up the expected benefits of that information against the costs of providing and using it.

• FASB is a private, non-governmental division that’s owned and funded by the US Securities and Exchange Commission. IASB is also private company receives its funding through private donors and corporations.

• FASB board members mainly work and reside in US while, IASB board members live and work in several nations around the world.