The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) both work toward the goal of developing and enforcing financial reporting standards for publicly held companies. The IASB headquarters are in London, United Kingdom. The FASB headquarters are in Norwalk, Connecticut.
Though both the IASB and the FASB have the goal of establishing accounting and financial reporting standards, the FASB focuses on accounting standards in the United States, while the IASB focuses on global standards. Since many companies operate businesses globally, the IASB and the FASB often work together, with both entities contributing toward global accounting standards. The FASB also sets standards and rules for individual certified public accountants practicing in the United States.
The IASB and the FASB are working together to combine various accounting and financial reporting requirements developed by both entities into single international financial reporting standards. For example, the IASB and the FASB previously had different common fair-value measurement and disclosure requirements. Having different requirements makes it difficult for global corporations to determine which standards they must follow. The IASB and the FASB are now combining their efforts; they have now one standard concerning common fair-value measurement and disclosure requirements.
Having one set of global accounting standards not only makes it easier for companies to adhere to the proper financial reporting standards, but it also makes their financial reporting more transparent. Using one set of financial reporting standards makes the financial reporting for global companies headquartered in one country, but operating subsidiaries in a number of countries, easier to understand for investors and national governing bodies of financial markets. An example of national governing bodies of financial markets is the Securities and Exchange Commission in the United States.
Though both the IASB and FASB are working in conjunction with one another, there are some major differences between the two entities. The FASB is a private, non-governmental division of the U.S. Securities and Exchange Commission. It receives its funding through the SEC. The IASB is a private company receiving its funding through private donors and corporations. FASB board members are comprised primarily of people who work and reside in the United Sates. IASB board members are comprised of people who work and live in many different nations around the world.
Sue-Lynn Carty has over five years experience as both a freelance writer and editor, and her work has appeared on the websites Work.com and LoveToKnow. Carty holds a Bachelor of Arts degree in business administration, with an emphasis on financial management, from Davenport University.