IASB and FASB Joint Conceptual

IASB and FASB Joint Conceptual Framework

How have the IASB and FASB sought to eliminate the differences in IASB and FASB accounting standards?

The way that both organizations have been seeking to eliminate these differences is by: creating a universal standard. This is because globalization has been highlighting how the financial accounting methods that are being utilized in various countries, can often lead to confusion. The reason why, is because there is no single standard that everyone is using, to make an accurate assessments about the current financial state of a business. This has lead directly to: problems in understanding the risks and the rewards of a possible investment. At the same time, this helped to encourage a lack of transparency and accountability. This is because many organizations were forced to use different accounting standards for the counties where they have operations. This made it more difficult for investors and auditors to discover irregularities. (McCarthy 2003)

As a result, both organizations have been working together since 2001, to create national standards that can be utilized around the globe. This is significant, because it shows how this has been the main focus in: addressing the differences between the two standards. As this is creating universal practices (that are accepted by both organizations) which will: improve transparency and accountability. Once this takes place, it means that they will be able to eliminate the difference between the two sides by: creating a principal that will be embraced around the globe. (McCarthy 2003)

Explain the progress to date on the development of the IASB / FASB joint conceptual framework with specific reference to the following areas: (a) reporting entity; and (b) objectives and qualitative characteristics

The overall progress of the development of these standards has occurred in three different phases to include: elements / recognition, measurement and the reporting entity. The elements / recognition phase is when there are a number of different standards that are being proposed to include: clarifying the definitions of what is an asset / liability and recognizing criteria that can resolve these differences. This is important, because it shows specific issues that are being dealt with, surrounding how a reporting entity will account for these issues. (Conceptual Framework 2011)

The measurement phase is when you were creating standards that can be used to accurately calculate the financial information that is being provided. Where, both entities have identified a number of issues that can help to create a universal standard to include: valuation strategies, confidence in the standards that are being presented and how to calculate interest rates along with other charges. In this case, a tremendous amount of progress has been made in: determining the various standards and which ones will be used. This helps to support the objectives and qualitative characteristics, by ensuring that a standard of measurement is used that takes into account these different viewpoints. (Conceptual Framework 2011)