IASB vs FASB
Before moving ahead, it would be pertinent to know the full forms of IASB and FASB. IASB is an acronym that stands for International Accounting Standards Board whereas FASB refers to Financial Accounting Standards Board. The two boards are international bodies that have been trying to evolve uniform financial accounting standards applicable in all countries of the world. The two bodies that were earlier working independently are now working in close cooperation with each other to achieve the objective of convergence of accounting in different parts fo the world to an international standard. Let us take a closer look at these international bodies.
Because of differences in accounting principles used in different countries, a strong need has all along been felt to have more uniformity in accounting so as to have more transparent financial reporting. This became necessary as companies became multinational and investors in different countries found it difficult to compare the performance of a company operating in different countries. Between IASB and FASB, FASB is the older body, having been created in 1973 to replace Committee on Accounting Procedure (CAP) and Accounting Principles Board (APB), which were organs of the American Institute of Certified Chartered Public Accountants. The main objective behind the establishment of Financial Accounting Standards Board was to bring financial reporting in US closer to Generally Accepted Accounting Principles (GAPP) to safeguard the financial interests of public.
FASB is made up of a board comprising 7 full time members who are experienced and qualified people in the field of accounting. They are expected to sever all ties with their previous employers to work on the board. The have a 5 year term and are provided additional 68 member staff to help them in achieving their objectives.
IASB, which stands for International Accounting Standards Board, is a private body founded in London in 2001 to replace International Accounting Standards Committee (IASC), is another body meant to work for uniformity in international financial reporting. IASB is a 16 member board that comprises specialists in the field of accounting drawn from various fields and different parts of the world.
Difference Between IASB and FASB
• FASB and IASB are two different apex bodies that have been working to have uniformity in financial reporting by developing standards for accounting all over the world.
• Of the two, FASB, that stands for Financial Accounting Standards Board is the older, having been established in 1973 in the US.
• IASB is an independent, privately funded board established in 2001 in London with a stated objective of development of accounting standards to be applied in all parts of the world.
• In 2002, the two apex bodies signed a memorandum of understanding to work in close cooperation with each other to develop accounting standards that are uniform and transparent.