Ann Grassmann 2 posts What have the IASB and FASB convergence efforts achieved? International accounting standards differed globally and the International Accounting Standards Board had been trying for decades to implement globally accepted regulations and principles. Few countries have adopted the International Financial Reporting Standards (IFRS) when the International Organization of Securities Commissions (IOSCO) adopted the IFRS in 2000 for cross-border securities in global capital markets. The International Accounting Standards Board (IASB) had attempted for decades to develop enforceable, quality International Accounting Standards for a global standardized system. Then the European Union required International Financial Reporting Standards (IFRS) for all companies listed on the European stock exchange to adopt the standards. These national standards would implement common accounting solutions throughout the world. The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) united with their Norwalk Agreement; which is a memorandum of understanding to use best practice on existing financial reporting standards and then maintain those implemented regulations. Both boards agreed that each would adopt a preferable standard that was implemented by the other and to work cohesively on needed improvements. Long-term commitment is needed from both boards as adopting mechanisms may differ within countries over a transitional period. Convergence may be an appropriate short-term strategy but is not suitable for adoption. Adoption mechanisms differ globally and require time for implementation, but it should enable and require relevant companies to state that they are in compliance with the International Financial Reporting Standards as implemented and regulated by the International Accounting Standard Board. International Financial Reporting Standards (IFRS) should be common practice for all global accounting standards. The International Accounting Standards Board (IASB) has been working for decades to develop and implement common accounting standards globally. By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. Despite a belief by some of the global acceptance of IFRS, others believe that a certain level of quality will be lost with full acceptance of IFRS. They may believe that the significant costs associated with adopting IFRS outweigh the benefits. Adoption would mean that a specific timetable when publicly listed companies would be required to use IFRS as issued by the IASB. Convergence means that the U.S. Financial Accounting Standards Board (FASB) and the IASB would continue working together to develop high quality, compatible accounting standards over time.

Future considerations are the high cost of conversion and the impact it will make on the bottom line profits of American companies in the short-term. Another key factor is the impact conversion will have on our domestic educational institutions which means they will then have to change curriculum as well as authors of text books will have to make major revisions to them. This will also impact CPA Review courses that would have to adjust to the changes.

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