Question

Briefly describe the FASB/ IASB convergence process and the principles that guide their convergence efforts.

Short answer

The work plan of IASB and FASB began in the year 2002, when an agreement was made between the two boards where each accepted their commitment for the advancement of good quality, agreeable accounting standards that could be used for both national as well as international financial reporting.

Step-by-step solution

Meaning of FASB

FASB is the Financial Accounting Standards Board is an independent governmental entity accountable for forming accounting and financial reporting standards for firms and governmental organization in the United States.

FASB/IASB convergence process and the principles that guide their convergence efforts

The international standards ought to be of excellent quality and suitably comprehensive. For accomplishing the objective, the IASB and the FASB have established a huge work plan for accomplishing the goal of advancing one set of world-class international standards. The work plan commenced in the year 2002. During the meeting, the FASB and the IASB promised to use their best efforts to make their current financial reporting standards fully agreeable as soon as it is possible, as well as interrelate their future work programs to make sure that once accomplished, harmony is maintained. This document was assisted in 2006 when the memorandum of understanding was issued by the parties which spotlighted three principles:

• Making efforts for removing differences between two standards that require important improvements is not the best use of the FASB’s and the IASB’s resources-rather a new usual standard should be advanced that improves the accounting information informed to the investors.

• Convergence of accounting standards can be effectively achieved with the help of advancement of high-quality usual standards over time.

• Serving the purpose of investors implies that the Boards should look for convergence by substituting standards required for improvement with jointly advanced new standards.

Eventually, in 2009 the Boards agreed on a process for accomplishing various important projects by 2011, comprising monthly joint meetings. As part of accomplishing this objective, it is condemning that the method by which the standards are set up should be independent. And it is essential that the standards are preserved and rising accounting problems are coped up with effectively.