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The reasons why the FASB and the IASB seeking to converge and improve their respective conceptual frameworks and why the project will take along time to complete. - Essay Example
For the past two decades, there has been a trend set by the two leading accounting standards setting boards namely as Financial Accounting Standard Board (FASB) and International Accounting Standard Board (IASB) in respect of providing unanimous accounting standards to the entities…
Following are some of the reasons for the convergence of accounting standards.
• Harmonize the global accounting standards so that the users of financial statements feel harmony with rest of their other counterparts anywhere across the globe.
• Making the financial statements of the entities comparable all over the world in respect of the accounting policies used by the entities
• Eliminating the impact of biasness and partiality from the financial statements such that integrative and objective financial statements can be prepared
• Providing opportunities especially to multinational companies to prepare their financial statements on the basis of single common accounting standards so that the manipulations and misrepresentations can be avoided while formulating the consolidated financial statements of the whole group of companies
In bringing more convergence in setting the accounting standards, yet there is a long period of time required for this purpose. Some of the reasons for such possible extended time to be taken are as follows:
Legal and regulatory stoppages and restrictions which do not allow the accounting standard boards to bring so early changes in the accounting standards merely on the basis of producing more convergent accounting standards. Laws of the jurisdictions ask some real and substance based reasons to bring such changes in the accounting standards.