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The International Accounting Standards Board has a mandate to produce a single set of high quality, understandable, and enforceable global accounting standards and to encourage convergence on these standards. To achieve its goals, the Board works closely with national standard setters around the world. The Financial Accounting Standards Board in the U.S. is one of its most important partners.
Introduction
Recently, increasing pressure from the international financial markets has led to major restructuring of the International Accounting Standards Committee (IASC), an organization that has been setting International Accounting Standards (IAS) for nearly 30 years. The Committee was restructured in 2001 into the International Accounting Standards Board (IASB), a highly professional organization supported by industry and governments around the world. The IASB was modeled after the Financial Accounting Standards Board (FASB) in the U.S., and created with a mandate to produce a single set of high quality, understandable, and enforceable International Financial Reporting Standards (IFRS) and to encourage convergence on these standards [18].1
The demand for high quality global accounting standards increased significantly when the European Commission required all publicly listed companies within the European Union (EU) to prepare their consolidated financial statements in compliance with IFRS, beginning in the year 2005 at the latest Upon this announcement, the IASB undertook three major sets of projects to meet this demand. The first project set provided leadership for the convergence of accounting standards. It included four projects: business combinations (phase I), insurance contracts, performance reporting, and share-based payments. The second project set included the first time application of the IFRS, and the activities of financial institutions, which were designed to make existing standards easier to apply. The third set of projects aimed to improve the basic standards that the IASB inherited from its predecessor, the IASC.
To achieve its goal of convergence, the IASB works closely with national standard setters around the world. The Financial Accounting Standards Board (FASB) is one of the IASB's most important partners. In face of the recent financial reporting crisis in the U.S., FASB has realized that it does not have all the answers to all of the accounting issues. There are some areas of U.S. standards that could be improved, where international standards seem to be more principles-based and...