Question

FASB/IASB Convergence Paper Written Assignment

• Find and search any website that discusses FASB, SEC, IFRS, or IASB.
• Describe and discuss the standards and rulings that are being contemplated through pending discussion exposure documents of FASB and IASB.
• Your paper should be a minimum of five to eight pages, including a cover page and bibliography.

Answer 1

CONVERGENCE OF FINANCIAL ACCOUNTING STANDARDS BOARD WITH THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

Background

The objective of this project is to eliminate a variety of differences between International Financial Reporting Standards and US GAAP. The project, which is being done jointly by FASB and IASB, grew out of an agreement reached by the two boards in October 2002 (the 'Norwalk Agreement').

The IASB-FASB convergence project was of particular importance as:

• The US Securities and Exchange Commission (SEC) was considering whether to adopt, or allow, IFRS for use by domestic issuers in the United States, and gave consideration to the success of the convergence process as part of this assessment.
• The Leaders of the Group of 20 (G20) issued a statement in 2009 calling for the convergence of accounting standards in the member nations by 2011. Whilst the original June 2011 deadline has not been met, subsequent G20 meetings in 2012 and 2013 reaffirmed the commitment to achieve convergence of accounting standards.

Six Key Initiatives

The FASB has undertaken the following six key initiatives to further the goal of convergence of U.S. GAAP with International Financial Reporting Standards (IFRS):

1. 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.

2. The short-term convergence project. The short-term convergence project is an active agenda project that is being conducted jointly with the IASB, and it is expected to result in one or more standards that will achieve convergence in certain areas. The scope of the short-term convergence project is limited to those differences between U.S. GAAP and IFRS in which convergence around a high-quality solution appears achievable in the short-term. Because of the nature of the differences, it is expected that a high-quality solution can usually be achieved by selecting between existing U.S. GAAP and IFRS.

3. Liaison IASB member on site at the FASB offices. One of the most visible features of the FASB’s daily operations that promotes convergence is the presence of a full time IASB member in residence at the FASB offices. James J. Leisenring, a former FASB Board member, is the IASB member currently filling the role of liaison Board member to the FASB. The role was created to facilitate information exchange and increase cooperation between the FASB and the IASB.

4. FASB monitoring of IASB projects. IASB projects are monitored by the FASB based upon the FASB’s level of interest in the topic being addressed.

5. The convergence research project. The FASB staff is currently working on a research project related to convergence. The project seeks to identify all of the substantive differences between U.S. GAAP and IFRS and to catalog those differences according to the Board’s strategy for resolving them. The project scope includes differences in standards addressing recognition, measurement, presentation or disclosure. Any topic in which a specific accounting treatment would be permissible under one basis of accounting but would not be permissible under the other basis of accounting is included in the project scope.

The IASC-U.S. Comparison Report, 2^nd ed. (1999), a comprehensive study of International Accounting Standards and U.S. GAAP, is available from the FASB. Standard setters, financial statement preparers and auditors, and regulators should be aware of similarities and differences between the financial reports that would be produced under IASC standards and those produced under national standards. This report compares each of the IASC's "core standards" (up to and including IAS 39) to its U.S. GAAP counterparts in areas such as scope, definitions, recognition and measurement requirements, and display and disclosure requirements.

6. Explicit consideration of convergence potential in all Board agenda decisions. Within the framework of the Board’s agenda criteria, all topics formally considered for addition to the FASB’s agenda need to be assessed for the possibilities for cooperation with the IASB (or another standard setter). Factors that the Board considers in assessing topics for the agenda include (a) the possibility that resolution would increase convergence of standards worldwide, (b) the opportunities the topic presents for cooperation with other standard setters, and (c) whether appropriate and sufficient resources are available for a joint or other cooperative effort.

As a result of these and other initiatives, the FASB expects to make significant progress toward international convergence in the next few years. However, because of the volume of differences and the complex nature of some issues, the FASB anticipates that many differences between U.S. and international standards will persist well beyond 2005. (By 2005, all EU-listed public companies are being required by the European Union to prepare their consolidated financial statements using IASB Standards.)

Current status of the project

The scope of the overall IASB-FASB convergence project has evolved over time. The tables below reflect the current situation with the various projects. Some of the projects listed are joint IASB-FASB projects that are not officially part of the Memorandum of Understanding (MoU) between the two boards, but where the boards had nonetheless agreed to work jointly on the project.

Please note that the convergence project is coming to an end and no new projects will be added to the agenda.

Short-term convergence projects

Project	Status
Borrowing costs	IASB reissued IAS 23 Borrowing Costs in 2008
Discontinued operations (IASB only)	The IASB issued IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations in March 2004
Fair value option for financial instruments (FASB only)	Completed
Government grants	Joint work on this project has been discontinued
Impairment	Joint work on this project has been discontinued
Income taxes	Joint work on this project has been discontinued
Investment properties	The FASB is actively working on this project
Joint arrangements	IASB issued IFRS 11 Joint Arrangements in 2011
Research and development (FASB only)	Completed
Segment reporting	IASB issued IFRS 8 Operating Segments in 2008
Subsequent events (FASB only)

Major joint projects

Project	Status
Business combinations	Converged standards issued in 2008
Conceptual Framework	This project has been partially completed. Work on further phases was discontinued and the IASB undertook an IASB-only comprehensive project
Consolidation	Converged standards issued in 2011
Derecognition	The IASB and FASB could not reach a converged solution and instead additional disclosures were implemented.
Fair value measurement	Converged standards issued in 2011
Financial instruments	This is a high-priority project of both boards and work is currently under way. This project compromises a number of projects, some completed and some under way. In some areas, divergent outcomes have been developed, and timing of the issuance of pronouncements is no longer aligned. The IASB has completed work on IFRS 9 Financial Instruments.
Financial statement presentation	Joint work on this comprehensive project has been discontinued. Some amendments to existing requirements have been made in relation to the presentation of the statement of comprehensive income
Insurance contracts	Joint work on this overall project has been discontinued, although the IASB and FASB continue to liaise on some issues
Intangible assets	The IASB and FASB decided in 2007 not to add this project to their joint agenda
Leases	This is a high-priority project of both boards and work is currently under way, although divergence has occurd regarding some aspects
Liabilities and equity	Joint work on this project has been discontinued
Post-employment benefits	Joint work on this project has been discontinued
Revenue recognition	IFRS 15 Revenue from Contracts with Customers was issued In May 2014. The standard is fully converged with ASU 2014-09 Revenue from Contracts with Customers.

Project milestones

The table below reflect key milestones in relation to the overall convergence project. For details of project milestones for each individual topic which is part of the convergence process, refer to the individual project pages.

Date	Development	Comments
29 October 2002	IASB and FASB enter into a Memorandum of Understanding on convergence
27 February 2006	IASB and FASB update and reissue Memorandum of Understanding (MoU)
11 September 2008	IASB and FASB update 2006 Memorandum of Understanding (MoU)	Set the goal of completing the major joint projects by 2011
2 April 2009	G20 Leaders Declaration on Strengthening the Financial System published	Contains recommendations for dealing with various financial accounting issues
28 September 2009	G20 Leaders Final Statement set goal to complete convergence of accounting standards across the G20 member nations by June 2011
5 November 2009	Joint IASB-FASB statement reaffirming commitment to convergence	Includes a 'pathway to completion' of major projects by 2011
19 October 2010	Request for Views on Effective Dates and Transition Methods published	Comment deadline 31 January 2011
21 April 2011	IASB-FASB progress report on convergence	Timetable for completion of convergence projects moved to the end of 2011
4 November 2011	G20 Leaders Cannes Summit Final Declaration calls for completion of convergence project	G20 requests a progress report in April 2012

Bibliography

Websites Used :

1. https://www.fasb.org/intl/convergence_iasb.shtml

2. https://www.ifrs.com/updates/fasb_listing.html

3. https://www.iasplus.com/en/projects/completed/other/iasb-fasb-convergence