Convergence of accounting standards is advantageous for companies listed on different exchanges. They do not have to produce several sets of financial statements and thus save large sums of money. Investors, for their part, can better compare and examine the financial data of companies where they are established. This international accounting harmonization is a process to achieve a reconciliation of various accounting standards. These form part of Anti Corruption Compliance.
The IASB and the FASB, as part of the Norwalk Agreement, signed in October 2002, close their respective standards, and contribute to improving the consistency, comparability and efficiency of international markets. Under the memorandum issued in February 2006 under the perspective of the common conceptual framework FASB – IASB project, the search for convergence has resulted in a merger of the two repositories.
The FASB is aligned with the position of the IASB for the abolition of the pooling of interest method. The IASB is aligned with the position of the FASB on the abolition of systematic amortization of goodwill, which is useful for Anti Corruption Compliance.
However, experience during the convergence of IASB / FASB shows that many years are needed to ensure the convergence of two repositories is based on the same culture of Anglo-Saxon business. This is mainly due to the existence of a conflict of approach between a rules-based approach in the case of FASB and the principles of the IASB.
On the one hand, the International Financial Reporting Standards (IFRS ) are rather considered as European standards, although the development process is dominated by Anglo-Saxon experts. On the other hand, the U.S. Generally Accepted Accounting Principles (U.S. GAAP) are much more focused and leave little room for decision-making companies.
IFRS standards are described as based on principles, which means that they leave much leeway for companies regarding the evaluation of accounting data. U.S. GAAP is described as rules-based and intended to regulate all possible aspects of the presentation of the accounts.
Such standards would require very detailed information from companies. Under the IASB – FASB convergence, harmonization of IFRS and U.S. GAAP is currently at work and common solutions have been found. This does not prevent the divergence of multiple views, one of the main aspects to solve the financial instruments and the presentation of performance is mentioned.
The Framework of International accounting standards bureau (International Accounting Standards Board – IASB) defines five basic elements that make up the accounts : assets, liabilities, equity, income and expenses. They should follow a logical route for proper accounting, the steps are : definition, recognition and measurement, which are reflected in the financial statements.