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Describe briefly what is the role of the International Accounting Standards Board?
The main responsibility of the International Accounting Standards Board is to establish international financial reporting standards which are abbreviated as IFRSs (Carmichael, & Graham, 2010).
Describe briefly what is the role of the U.S. Financial Accounting Standards Board?
Other than developing broad accounting concepts and standards, the US Financial Accounting Standards Board is also tasked with the responsibility of providing guidance on proper implementation of these standards and concepts, both of which are helpful in guiding the board in not only establishing standards but also providing a conceptual framework for determining accounting issues (Carmichael, & Graham, 2010).
What are the benefits of having one world-wide standard for financial reporting?
A one world-wide standard for financial reporting will enhance tremendously comparability of financial statements and especially with this phenomenon of globalization. Companies using world-wide standard for financial reporting may also find it easier to raise capital in foreign countries if they wish to (Carmichael, & Graham, 2010).
The Securities and Exchange Commission has currently accepted International Financial Reporting Standards for foreign companies but not US. listed companies. As a manager of a large public company, what concerns would you have if IFRS replaces U.S. GAAP?
First, By Replacing IFRS with U.S. GAAP revenue recognition will be affected tremendously in terms of its capture and determination which is not the case with U.S. GAAP. By according the management greater space in determining revenue, IFRS will to a larger extent deny financial statement the objective that they have enjoyed with US GAAP (Carmichael, & Graham, 2010). This migration will require a change of systems and processes throughout the organization which will mean additional costs.
If the FASB accepts IFRS for all entities, do you believe accounting information become more useful?
First, comparability will improve with the adoption of IFRS. Second, the requirement to recognize revenue when the actual transfer of either goods or services is made to a customer will improve tremendously the objectivity of financial statements. The quality of the information contained in the financial statements will also improve in a way that enables creditors, investors, or any other entity to better understand and evaluate the financial performance of an enterprise.
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How are the FASB and IASB standards enforced?
FASB standards are normally enforced by the AICPA (American Institute of Certified Public Accountant) and SEC (Securities and Exchange Commission). IASB standards on the other hand are enforced and regulated by International Organization of Securities Commissions (IOSCO) (Carmichael, & Graham, 2010). The enforcement itself of the two standards is through a newly created body by the name Monitoring Board, which has the name suggests, is tasked with the responsibility of monitoring and enforcing these standards.
How might the U.S GAAP and IFRS converge on the issue of LIFO accounting for inventory?
The fact that IFRS does not permit LIFO, which is recommended by US GAAP, require that the united States repeal the LIFO law. This will pave way for another inventory method that will conform to the international standards and therefore improve comparability and objectivity of the financial statements.