The reasons why the FASB and the IASB seeking to converge and improve Essay

The reasons why the FASB and the IASB seeking to converge and improve their respective conceptual frameworks and why the project will take along time to complete - Essay Example Following are some of the reasons for the convergence of accounting standards. †¢ Harmonize the global accounting standards so that the users of financial statements feel harmony with rest of their other counterparts anywhere across the globe. †¢ Making the financial statements of the entities comparable all over the world in respect of the accounting policies used by the entities †¢ Eliminating the impact of biasness and partiality from the financial statements such that integrative and objective financial statements can be prepared †¢ Providing opportunities especially to multinational companies to prepare their financial statements on the basis of single common accounting standards so that the manipulations and misrepresentations can be avoided while formulating the consolidated financial statements of the whole group of companies In bringing more convergence in setting the accounting standards, yet there is a long period of time required for this purpose. Some of the reasons for such possible extended time to be taken are as follows: Legal and regulatory stoppages and restrictions which do not allow the accounting standard boards to bring so early changes in the accounting standards merely on the basis of producing more convergent accounting standards. Laws of the jurisdictions ask some real and substance based reasons to bring such changes in the accounting standards. ... Therefore practically once the accounting standards are reformulated, their adoption takes two to three years by the entities in their implementation. In a nutshell, the main hurdle for setting up the new accounting standards for the purpose of convergence, is posed by the regulatory bodies and persuading them for such changes require substantial amount of time and efforts followed by the time taken by the entities to adopt the new accounting standards after their formulation therefore making it more longer for the accounting standards to be convergent globally. Discuss the problems involved in refining, updating, completing and converging the existing FASB and IASB conceptual frameworks into a common framework, illustrating your discussion with reference to specific issues. Discuss that are controversial and difficult to resolve The major problems that arise in refining, updating, completing and converging the present accounting standards issued by FASB and IASB have significant imp lications. Most of the problems are of technical nature however some administrative issues that hinder the convergence process cannot be altogether ignored. In the following discussion some of those problems are highlighted. Retrospective changes in the financial statements In developing new standards which are more convergent in the form of a common framework, both FASB and IASB have to change their existing frameworks altogether. Due to those changes, the financial statements previously prepared under each of the accounting standards would have to be changed by the entities on retrospective bases under newly developed common framework which may display some material diversions as compared to the previously furnished financial statements. In this way the financial