The historical relationship between the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) is the project of convergence. As the economic environment changes, and as international boundaries melt away, there is a need for a conceptual framework that unifies domestic and international financial reporting. The benefit would be financial statements that are used by investors that can make investing decisions even when comparing domestic and international companies. Roughly, there are 1000 international companies trading on the New York Stock Exchange (NYSE). The potential to open the market to more international trade is there if the need for reconciliation of financial statements of internal companies from international financial reporting standards (IFRS) to generally accepted accounting principles (GAAP) is alleviated.
First, in 2002, both the IASB and FASB held a meeting in Norwalk to make an agreement that both standard- setting bodies would begin the project of establishing an accounting framework that is both high- quality and compatible with use of financial reporting in the U.S. and internationally, in the interim and annually. The project is divided into short- term and long- term goals. Beginning with the short- term goals, both standard- setting bodies agreed to start with revising the pronouncements by removing differences and strengthening weakness between the two. In the long- term, for uniformity, additions will be made that should make financial reporting more universal. Other long- term goals of the convergence project is to determine funding for the foundation, to be called the International Accounting Standards Committee Foundation (IASCF), educating users of the financial statements (i.e. auditors, financial statement preparers, investors, and managers), and streamlining interactive data for international financial reporting.
Next, it is the intent of both FASB and IASB to improve the standards of financial reporting, and to have a conceptual framework that guides financial statement prepares in producing statements that educate all interested parties; as well as provide guidance for decision- making by providing information that is reliable, relevant, comparable, and understandable. (Schroeder, Clark, & Cathey, Chapter 1, 2011). The three major pronouncements of FASB are: (1) standards, interpretations, and staff positions; (2) financial accounting concepts; and (3) emerging issues task force statements. (Kimmel, Weygandt, & Warfield, Chapter Chapter 1: Financial Accounting Standards, 2007). Statements issued by FASB are considered to be GAAP, and the interpretations have the same authority as well as it modifies or extends standards. (Kimmel, Weygandt, & Warfield, Chapter Chapter 1: Financial Accounting Standards, 2007). Not-to-mention, the staff positions offer timely guidance on certain issues. (Kimmel, Weygandt, & Warfield, Chapter Chapter 1: Financial Accounting Standards, 2007). Financial concepts are the concepts that are used in coming up with future standards, but does not establish GAAP. (Kimmel, Weygandt, & Warfield, Chapter Chapter 1: Financial Accounting Standards, 2007).
Lastly, emerging issues task force is the group that comes to an agreement on how to handle emerging and new that are considered to be urgent as they arise. (Kimmel, Weygandt, & Warfield, Chapter Chapter 1: Financial Accounting Standards, 2007). The IASB equivalent pronouncements are as follows: (1) objective of financial statements, (2) qualitative characteristics, (3) elements of financial statements, and (4) concepts of capital and capital maintenance. (Schroeder, Clark, & Cathey, Chapter 1, 2011). The objective of the financial statements is to provide qualitative information that is useful in making an economic decision. (Schroeder, Clark, & Cathey, Chapter 1, 2011).
The qualitative characteristics of financial statements are reliability, understandability, relevance, and comparability. (Schroeder, Clark, & Cathey, Chapter 1, 2011). The elements of the financial statements are measurements of assets, liabilities, and equity on the balance sheet; and revenue and expenses are on the income statement. (Schroeder, Clark, & Cathey, Chapter 1, 2011). Concepts of capital and capital maintenance, pertains to the physical assets and equity of the organization and financial investments made during the normal course of operations, respectively. (Schroeder, Clark, & Cathey, Chapter 1, 2011). Thus, IASB’s and FASB’s similarities in its conceptual framework should make it somewhat easier to begin converging standards that will be more generally and widely accepted
Continuing, an understanding of the IFRS, along with GAAP, and other essentials in accounting is good preparation for a successful career as an account. As the economic environment evolves, and as companies become tempted to mislead stakeholders, creditors and investors with inconsistent information, the need for more accountant, auditors, and forensic auditors is growing. Not- to- mention, other opportunities will arise in the profession, such as teaching accounting courses.
For instance, according to the University of Phoenix, “the Masters of Science in Accountancy (MSA) is the advance accounting degree program that is designed to address the goals of the American Institute of Certified Public Accountants’ Vision Project for professional values, communications, leadership technology skills and strategic, critical- thinking skills.” Students, who complete the program successfully, can expect a life in accounting vocation that is very promising. A MSA is also multifaceted in that there are many career options; such as financial analyst, budgeting, revenue examiners, auditor, accountant, tax professional, professor, and management. Also, the MSA program prepares students to sit for the CPA exam, administered by the AICPA and/ or for CMA exam. Taking classes such as financial accounting and managerial accounting gives students an appreciation of reading financial statements (balance sheets, income statements, cash flow statements, and retained earnings statements). Financial reporting will prepare students to perform as a CPA, using financial information to make certain calculations and perform analysis. (“University Of Phoenix”, n.d.).
Courses such as auditing, accounting theory and research, and forensic accounting will train the eye to identify misstatements and to make opinions on financial statements. Internal controls and accounting information systems not only teaches students to use interactive data bases, but it also teaches students what it is to have strong internal controls and to use them effectively. (“University Of Phoenix”, n.d.). The MSA prepares students who may have an interest in the private sector. Classes in governmental accounting, teaches students how to prepare statements for local and federal governments, as well appropriate reporting for not- for- profit organizations. (“University Of Phoenix”, n.d.).
Lastly, courses in communication for accountants and accounting ethics, helps students understand the conceptual framework of accounting and their ethical responsibility to the SEC, the public and to the organization being represented. Students can be gain confidence in taking the CPA exam by the wealth of information that is available for growth and development. Through UOP, students have ample access to the CPA practice exam in preparation for the official test. The lessons that are learned in the classroom, physically or virtually, can be used in real life situations, helping students to make a connection with what has been learned to actual job duties. Lastly, but most importantly, in- demand accounting skills is gained from entering into the MSA program. No matter what book accounting book is utilized, the concepts are the same, and are used amongst many industries near and abroad.
In conclusion, the opportunities are endless with a MSA. Accountants are needed now more than ever. As the FASB and IASB converge, there will be opportunities to be a part of the foundation, as well as other standard- setting bodies.
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2011). Financial Accounting Theory and Analysis. Text and Cases, (10th ed.). Retrieved from University of Phoenix eBook Collection. Kimmel, P. D., Weygandt, J. J., & Warfield, T. D. (2007). Financial Accounting: Tools for business decision making (4th ed.). Retrieved from University of Phoenix eBook Collection. University of Phoenix. (n.d.). Retrieved from http://www.phoenix.edu/programs/degree-programs/business-and-management/masters/msa