FASB and IASB: The Financial Accounting Standards

FASB and IASB:

The Financial Accounting Standards Board is an organization in the private sector that establishes financial accounting and reporting standards in the United States since 1973. The standards established by this organization govern the preparation of financial reports by various companies. The mission of the Financial Accounting Standards Board is to set up and enhance financial accounting and reporting standards to provide information and direct the public. On the other hand, the International Accounting Standard Board is an organization mandated with the responsibility of establishing accounting standards to deal with subjectivity. Moreover, accounting standards established by this body help in achieving comparability between organizations. Since its inception in 1973, IASB works toward the improvement and coordination of financial reporting.

Aspects of FASB and IASB:

Since the Financial Accounting Standards Board and International Accounting Standard Board play a critical role in the establishment of financial accounting and reporting standards, these organizations have various aspects including:

Development of Accounting Concepts:

One of the major aspects of the Financial Accounting Standards Board is to develop wide-ranging accounting concepts and financial reporting standards as well as provide guidance on their implementation ("Facts about FASB," 2007). The concepts developed by the Board help in guiding the organization in setting up standards and developing a conceptual framework for resolving accounting problems. In addition to resolution of accounting issues, the conceptual framework helps the public to understand the nature and constraints of information provided through financial reporting. The organization's work on financial standards and conceptual framework is dependent on its research to gain new insights and ideas.

Synchronization of Accounting Standards:

As the International Accounting Standards Board functions under the supervision of the International Financial Reporting Standards Foundation, it works to harmonize financial accounting standards. As one of its major objectives, the organization synchronizes national accounting standards with the International Accounting Standards and high-quality remedies of the International Financial Reporting Standards ("What is the IASB?" n.d.). According to the organization, some of the major benefits of harmonizing accounting standards include cost- and time-saving and promoting global trade and inter-border securities' listing. Moreover, the synchronization of these standards helps in the growth of developing nations and encourages foreign investment.

Role of FASB and IASB in Setting Accounting Standards:

Based on an analysis of the two organizations, the Financial Accounting Standards Board and the International Accounting Standards Board play a critical role in establishing accounting standards by acting as the accounting policy makers. These bodies initiated a project that is aimed at developing a global reporting model with more predictive value for users of all financial statements (Cain, 2008). Based on the proposal of the two organizations, the new model will be applicable to all for-profit businesses.

Conclusion:

FASB and IASB are financial organizations with the responsibilities of establishing financial accounting and reporting standards. As a result of their role in this process, these organizations act as accounting policy makers that provide guidance to the preparations of financial statements by businesses.