International Financial Reporting Standards

IFRS

Introduction

IASB and FASB are standards that have been working for standardized accounting standards. Both of these Boards offer accounting and financial reporting standards but for region. FASB standards are applicable in United States only whereas, IASB are ap0plicable across the globe. As majority of the companies are operating globally, IASB and the FASB decide to work together in order to make one single global accounting and financial reporting standards. The focus of this research is explaining how the International Accounting Standards Board and the Financial Accounting Standards Board would be working together i.e. Convergence for developing International Financial Reporting Standards.

Discussion

In order to make a single and effective globule accounting reporting standards, IASB and FASB has been working together since many years in order to combine numerous financial and accounting reporting requirements formulated by these two entities. The aim of this combination is to develop one reporting standard. For instance, previously these two entities have different ways of measuring and disclosure requirements for Common Fair Value. Since, they had different ways of determining Common Fair Value, makes hard for global companies and firms to decide which standard to follow (Deloitte, 2013).

Due to such difference, the decision and efforts to have one standard will eliminates measurement and disclosure requirements. Furthermore, this decision will reduce the complexity as well as misinterpretation for companies having global operations. Beside this, this would be making financial reporting more transparent and visible to shareholders and stakeholders.

As companies will be utilizing one set of financial and accounting reporting standards, this will leads to formulate global financial reporting for companies headquartered in one country, nevertheless having operations or subsidiaries in numbers of countries, this approach will be make it easier for investors and of financial markets national governing bodies to understand the financial statements of multinational companies. National governing bodies of financial markets example is the Securities and Exchange Commission of United States.

In order to answer how FASB and IASB convergence will assist in developing International Financial Reporting Standards (IFRS), the answer for this lies in the convergence state that has been decided by the mutual agreement by both the entities. There are many short term convergence project completed by FASB and IASB i.e. considerably congregating their standards for short term payments along with segment reporting. Beside this, there would be an option for fair value for financial assets & liabilities as ...