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Reflection Paper

Introduction

Accounting standards is considered to be a very detailed aspect in financial reporting. Financial standards are needed to ensure the smooth functioning of the financial markets. There are different accounting standards followed around the world (Cunningham, 2004). The two most commonly used accounting standards are IFRS and GAAP. Similarly, FASB and IASB are the two bodies who are responsible for making these standards. FASB develops GAAP standards while IASB develops IFRS standards. Before moving further, you need to have a general knowledge about the two standards.

Accounting implies the standards and disciples of maintaining an update, concise, clear and coherent book that covers all the internal and external financial transactions (sales, purchases, accounts receivable, accounts payable, bank loan, capital, etc.). For the purpose of drawing an unambiguous picture, one needs to adopt a benchmark or standard that needs to be. Therefore, a body of speculation and inspection has been designed and developed on a continuous and iterated basis for steady improvement and maintaining discipline at the same time while inputting relevant data and information regarding the performance of the organization.

Bodies of Accounting Standards

FASB stands for Financial Accounting Standard Board is a not for profit organization, and it is responsible for making GAAP (Generally Accepted Accounting Principle), which is in action, in US, while IASB, which stands for, International Accounting Standard Board is an independent body which manages the IFRS(International Financial Reporting Standards).

As for our concerned, the domain of this research report caters FASB only so let's talk about FASB a bit more. FASB has been designated as the body that is authorized to set accounting standards for listed companies in the United States; this authorization has been provided by the Securities and Exchange Commission.

The standards of accounting are necessary for the proper and effective performance of the country. Because the financial transactions are a significant part of the country's economy that can unsure its development. The decisions about resource allocation the decisions related to the investments are dependent on the powerful, concise, transparent and understandable financial methodologies. Several decisions of organizations are based on the financial information about the operations and financial position of individual entities involved in the process.

The framework followed by FASB helps the organization to establish acceptable limits in order to judge the process of preparing financial and accounting information; in addition, FASB also focuses to increase understanding and trust of the users of information (accounting and financial). The FASB is concerned with developing concepts of accounting and comprehensive financial reporting standards and provides a guide for their implementation (Greuning, 2006).

The ideologies followed by FASB help the organization to establish standards and provide a conceptual framework to solve the financial and accounting problems that exist in the country. The core purpose of FASB is to create and develop the standards of accounting and financial information for orientation and education of the public, including issuers, auditors and users of financial information (Greuning, 2006).

Convergence of the Two Bodies

There was a time when both IFRS and GAAP were ...