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FASB Sets Out Accounting Convergence Plans

by Mike Godfrey,, Washington

12 August 2015

Russell Golden, the Chairman of the Financial Accounting Standards Board (FASB), which is responsible for US Generally Accepted Accounting Principles (GAAP), has confirmed that it will work towards global accounting standards that are as comparable as possible.

In an article on the FASB website, he said that he saw little support for previous moves towards full convergence of US GAAP with International Financial Reporting Standards (IFRS), as it has "become clear that one size does not fit all."

He thought that "the most important driver of this development is the increased recognition among US stakeholders that legal, regulatory, and cultural differences among and between jurisdictions are likely to result in at least some variation in the way that accounting standards are written, applied in practice and enforced."

However, he also noted that "making standards more comparable will provide important benefits to financial statement users, preparers, and auditors; make it easier for investors, lenders, and others to most efficiently and rationally allocate their capital; and reduce costs for those who prepare and audit financial statements."

He saidp the FASB has concluded that "the best way to develop more comparable global standards is through a broad-based, inclusive, collaborative effort in which national standard setters from jurisdictions comprising the world's major capital markets play an important role – along with the International Accounting Standards Board (IASB), [responsible for IFRS]."

He disclosed that the FASB has been "meeting with national standard setters including those in the United Kingdom, Germany, Canada, and Japan – in addition to the IASB – to discuss areas in which we might work together to develop more comparable standards. We also are building relationships with national standard setters in Australia, China, France, Italy, and Korea with the same objective."

The FASB has therefore "developed a three-pronged strategy for continuing to improve global accounting standards and make them more comparable: continue to develop high quality US GAAP standards; actively participate in the development of IFRS; and enhance relationships and communications with other national standards setters."

TAGS: generally accepted accounting principles (GAAP) | accounting | capital markets | audit | Australia | China | United Kingdom | International Accounting Standards Board (IASB) | Canada | France | Germany | Italy | Korea, South | United States | standards | Japan

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