Accounting Standards Boards University of Phoenix Accounting Theory and Research ACC541 The history of the Financial Accounting Standards Board and the International Accounting Standards Board The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are currently working together on a short-term international convergence project to remove a variety of individual differences between United States Generally Accepted Accounting Principles ( U. S.
GAAP) and the International Financial Reporting Standards (IFRS) (Schroeder, Clark, & Cathey, 2005). U. S. GAAP are the laws of accounting in the United States. They govern how accountants measure, process, and communicate financial information about companies to the majority of Americans (Horngren, Harrison, Jr. , & Bamber, 2005). Similarly, IFRS are principles, standards, interpretations, and the framework adopted by the IASB, stating how particular types of transactions and other events should be reported in financial statements (Investopedia, 2010).
The convergence project between the Financial Accounting Standards Board and the International Accounting Standards Board will make it easier to read and interpret financial statements from almost any country in the world (Clay, 2007). Currently, if a company is issuing financial reports to users in foreign countries, they may take one of several different approaches: A. ) send the same set of financial statements to all users (domestic or foreign); B. ) translate the financial statements sent to foreign users into the language of the foreign nation’s users; C. translate the financial statements sent to foreign users into the foreign nations language and currency; D. ) prepare two sets of financial statements, one using the home countries language, currency, and accounting principles and the second, using the language, currency, and accounting principles of the foreign country’s users; E. ) prepare one set of financial statements based on worldwide accepted accounting principles (Schroeder, Clark, & Cathey, 2005). Option E is the focus of the convergence project between the two boards.
The FASB and the IASB have commenced deliberating differences identified for resolution in the short-term project with the objective of achieving compatibility by identifying common, high-quality solutions. Both boards have agreed to use their best efforts to issue exposure drafts of proposed changes to U. S. GAAP or IFRSs that reflect common solutions to some, if not all, of the identified differences (Schroeder, Clark, & Cathey, 2005). There is definitely a need to have a centralized system in place that governs all companies in preparing financial statements.
For example, at the present time, approximately only 1,000 foreign companies list on the United States stock exchange because of the high cost involved in recasting their financial statements to U. S. GAAP. Currently, if a company wants to list on the U. S. stock exchange, they must recast the financial statements to reflect current U. S. GAAP by filing form 20-F with the Securities and Exchange Commission (SEC) within six months of the company’s fiscal year-end (Schroeder, Clark, & Cathey, 2005). United States accountants are now preparing for the change from U. S.
GAAP to the IFRS already adopted by many countries in others parts of the world. After multiple delays, the United States is expecting to phase out GAAP in favor of IFRS in 2015, with the new standards appearing for the first time on U. S. Certified Public Accountant (CPA) exams in 2011 (Soule, 2010). The change from U. S. GAAP to IFRS has some people worried. Cecil Nazareth, who runs a New York City based IFRS Partners, says, “a principles system works best only when individuals and companies hew to those principles”, commenting on the differences between the rules based U.
S. GAAP system and the principles based IFRS system (Soule, 2010). Preparation for professional Life The Master of Science in Accountancy (MSA) provides the breadth of knowledge for the professional accountant. Students master the theory and principles that frame a wide range of problems and issues encountered in the accounting profession. This program is designed for accountants and non-accountants who are preparing for a professional certification in accounting such as the uniform Certified Public Accountant (CPA) exam.
This degree will allow students to seek positions in such career areas as accounting, auditing, and budgeting (University of Phoenix, 2010). This program addresses the goals of the American Institute of Certified Public Accountants (AICPA) Vision Project for the professional values, communications and leadership skills, strategic and critical thinking skills, and technology skills (The American Institute of Certified Public Accountants, 2007).
In addition, the program meets the University of Phoenix learning goal of collaboration. A key feature of this program is the utilization of the CPA Test Prep software, which is integrated throughout the core program (University of Phoenix, 2010). References Clay, M. E. (2007). IASB and FASB Working Together to Converge Accounting Standards. Proceedings of the Northeast Business & Economics Association, (), 268-272. Horngren, C. T. , Harrison, Jr. , W. T. , & Bamber, L. S. (2005). Accounting (6th ed. ).
Upper Saddle River, New Jersey: Pearson Education, Inc.. Investopedia. (2010). International Financial Reporting Standards- IFRS. Retrieved from http://www. investopedia. com/terms/i/ifrs. asp Schroeder, R. G. , Clark, M. W. , & Cathey, J. M. (2005). Financial Accounting Theory and Analysis (8th ed. ). : John Wiley & Sons, Inc.. Soule, A. (2010, June). Bridging the GAAP. Fairfield County Business Journal, 49(23), 23-25. University of Phoenix. (2010). Academic Catalog. Retrieved from University of Phoenix, website.