The Similarities And Differences Between The IASB And FASB

Although the IASB and FASB have been striving since 2002 to achieve convergence, there are still many differences between the two. These differences range from revenue recognition to the matter in which the organizations receive funding. Under the IASB, the accrual method is the only preferred way of recognizing revenue and expenses. While FASB accepts cash basis and accrual basis; cash basis is only accepted if cash sales are less than $5 million per year. When it comes to generating funds the IASB receives most of its funding through donations from accounting firms and corporations. This raises some concern as to the dependence of the IASB. With private parties funding it, the IASB has had a lot of pressure to conform to certain policies
A few years ago FASB and the IASB implemented eight phases to undergo convergence. These eight phases had their own letter, ranging from A-H. The first letter A, deals with objective and qualitative characteristics of financial reporting. The second phase, or Phase B, deals with definitions of elements, recognition, and de-recognition. More specifically it dealt with issues such as asset and liability clarification and resolving other definition issues. Phase C was implemented to provide a guidebook to choosing the proper measurement foundations that satisfy objectives and qualitative characteristics of financial reporting. The fourth phase, Phase D, is about how to determine what is classified as a reporting entity for financial reporting. Phase E is all about figuring out the concepts underlying display and disclosure of financial information. Phase F initiates a framework that has equal authority for the use of FASB and the IASB in setting standards. The next to last phase (G) is about not-for-profit organizations. Lastly Phase H takes into consideration any type of issue that was not able to fall into the previous