October 2002 was a significant year in the history of accounting. The Norwalk Agreement , a memorandum of understanding was announced by Financial Accounting Standards Board and the International Accounting Standards Board (IASB). This was a significant step towards the formalization of the commitment of the two organizations to converge the US and International accounting standards.
The FASB has has undertaken the following six key initiatives to further the goal of convergence of U.S. GAAP with International Financial Reporting Standards (IFRS):
- Joint projects being conducted with the IASB – Key projects under this are Revenue Recognition and Business Combinations
- The short-term convergence project. – These are projects where the convergence around high quality solutions to resolve differences between US GAAP and IFRS appear achievable in the short term .Solution could be selecting between existing existing U.S. GAAP and IFRS.
- Liaison IASB member on site at the FASB offices. – Having full time IASB member , James J. Leisenring, in residenece at the FASB office is a significant feature.
- FASB monitoring of IASB projects. IASB projects are monitored by the FASB based upon the FASB’s level of interest in the topic being addressed.
- The convergence research project. The FASB staff is currently working on a research project related to convergence. The project identifies and catalogs the substantive differences between U.S. GAAP and IFRS.
- Explicit consideration of convergence potential in all Board agenda decisions. Within the framework of the Board’s agenda criteria, all topics formally considered for addition to the FASB’s agenda need to be assessed for the possibilities for cooperation with the IASB (or another standard setter).