Conduct research and write a 2–3 page paper addressing the following Topic: Inte
ID: 2725753 • Letter: C
Question
Conduct research and write a 2–3 page paper addressing the following Topic: International Financial Reporting Standards. International Financial Reporting Standards (IFRS) are formulated by the International Accounting Standards Board (IASB), which is a body representing accountants and other interested parties from different countries. While IFRS is not currently applicable in the United States, there is mounting pressure on the SEC to accept the standards in one form or another. MSF practitioners need to be aware of the growing influence of IFRS outside the United States. For example, foreign companies listed on U.S. exchanges need to reconcile IFRS-based numbers with U.S. GAAP. The FASB is currently involved in a joint project with the IASB-called the “convergence” project-that aims to eventually eliminate all differences between the two sets of standards. Considerable progress has been achieved to date in this direction. In terms of understanding competitiveness and collaboration in a global economy, research, explore, and discuss the “Norwalk Agreement” between the FASB and the International Accounting Standards Board (IASB). What are the key initiatives of the Norwalk Agreement to further the goal of the convergence of U.S. GAAP with International Financial Reporting Standards? In a paper, discuss the joint projects being conducted with the IASB to address Revenue Recognition and Business Combinations. Please cite at least two sources used.
Explanation / Answer
Answer: In 2002, the FASB and the IASB announced the Norwalk Agreement to converge their financial reporting standards as soon as is practicable. The FASB's initiatives to further convergence include a short-term project to eliminate differences in which convergence is likely to be achievable in the short term by selecting either existing U.S. GAAP or IASB requirements. The FASB and IASB also are jointly working on several projects that deal with broader issues, including a project to create a common conceptual framework. In addition , a full-time member of the IASB serves as a liaison with the FASB.
Joint projects being conducted with the IASB. Joint projects are those that standard setters have agreed to conduct simultaneously in a coordinated manner. Joint projects involve the sharing of staff resources, and every effort is made to keep joint projects on a similar time schedule at each Board. Currently, the FASB and IASB are conducting joint projects to address Revenue Recognition and Business Combinations.
Conceptual Framework Project Update
Business Combinations Project Update
Financial Statement Presentation
Revenue Recognition Project Update
Business Combination:
This project was a joint project between the FASB and the IASB and was the second phase of their projects on business combinations. In this phase of the project, the Boards reconsidered the existing guidance for applying the purchase method of accounting for business combinations (now called theacquisition method).
The objectives of the project were to improve and simplify the accounting for business combinations and to develop a single high-quality standard of accounting for business combinations that could be used for both domestic and cross-border financial reporting.
Revenue Recognition:This project update summarizes the project activities and decisions of the FASB and IASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.