However, this is different in New Zealand where a single set t of accounting standards is applied to all the sectors. This is contrary to what happens in the United States where the Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board are responsible for setting standards for public sector units. Both Boards are detached from the FASB and from each other, making the three sets rather different.
The frameworks by both IASB and FASB fails to establish a full-bodied theory of the reporting entity, that is, the representation that makes a legal or even economic entity a reporting entity to which the outline is applied. For the financial reporting purposes the concept will clearly define boundaries for the reporting unit. A good example being that the combined financial statements are planed on the basis that the parent entity plus those entities under its control jointly represent a reporting entity. 1
It becomes hard to reach a mutual agreement regarding the objectives because FASB framework has two objective statements the first one relates to business entities while the second relates to non-business units. ...
Both list a wide variety of present and potential users.
Although both frameworks contain similar qualitative characteristics ,for example, reliability and comparability, discuss constrictions (e.g. the cost-benefit analysis) and discuss financial information in terms of aspect that bring the usefulness of the information in making of economic decisions to the users. They also have some differences that hinder them from reaching at an agreement. These differences include, IASB framework treating understability, reliability, comparability and relevance as primary qualitative characteristics while on the other hand FASB framework sets it's characteristics in a pecking order treating reliability and relevance as the only primary qualitative characteristics, understability is treated as a user-specific and lastly comparability is treated as a secondary qualitative characteristic. According to the two frameworks the use of conservatism or prudence does not permit the planned understatement of net assets and profits though they argue that improvements could still be made to the framework's qualitative characteristics. However some posses a different views arguing that any perception of conservatism is not consistent with the neutrality concept. (Alexander, Britton and Jorissen, 2005)
Misunderstandings between the two theories plus other complications with reliability appear to touch some present and potential projects in either theories or even one of them. Verifiability has been equated with reliability by some of the Boards voters this has however overlooked the theories meaning of the association between the worlds economic situations and the available accounting information.
The prevailing misunderstandings