The SEC's Condorsement Proposal Research Paper Example | Topics and Well Written Essays - 750 words

The SECs Condorsement scheme - Research Paper ExampleIn this study, I would discuss about the IASB as well as the FASB and their relationship with each other. I would indeed evaluate the SEC proposal and express my opinions about the same. IASB & FASB and Their Relationship with Each Other In family 1973, the International Accounting Standards Committee (IASC) was set up for the purpose of maintaining standardization in the accounting principles both over the world. In 2001, the International Accounting Standards Board (IASB) was constituted subsequent to the restructuring of the IASC. The main goal of the IASB was to dress and issue standards to be observed in the development of financial statements and also to encourage the global light and adherence of those standards. The IASB had hitherto issued various standards known as the International Financial Reporting Standards (IFRS) on diverse accounting subjects (Deloitte, 2011). The Financial Accounting Standards Board (FASB) was formed in 1972, as a nominated embed in the private sector for setting up standards of financial accounting as well as reporting in the USA. The local firms in the United States that are listed with the Securities Exchange Commission (SEC) are requisite to file their financial reports exercising the Generally Accepted Accounting Principles of the United States (US generally accepted accounting principles) (Financial Accounting Standards Board, n.d.). The FASB and the IASB are fundamentally built under the same theoretical framework. Nevertheless, there are certain major dissimilarities between the standards issued by the IFRS and the US GAAP. The IASB standards are broader and have restricted interpretive assistance for their implementation, as compared to those of the US GAAP. The IASB does not normally issue interpretations of the IFRS, and rather lets the International Financial Reporting Interpretations Committee (IFRIC) and the individual auditors to put into practice the principles body forth in the IFRSs. While the US GAAP standards, as a result of the strong legal and regulative surroundings in the US, have a more prescriptive policy. Consequently, the US standards enclose the underlying principles, sodding(a) implementation direction as well as the industry interpretations (Ernst & Young, 2010). Evaluation of the SEC Condorsement Proposal The Condorsement Proposal made by the Securities Exchange Commission (SEC) is a combination of the convergence start out and the indorsement approach for the amalgamation of the IFRS with the US GAAP. The condorsement framework summarized by the SEC consists of three phases of convergence and an ongoing process of endorsement where the FASB assesses the necessary and appropriate modifications in the IFRS for utilization by the US companies. The first phase of convergence consists of the result of the projects under their Memorandum of Understanding (MoU) by 2011. In the subsequent two phases the FASB woul d devise arrangements to amalgamate alive(p) IFRS schemes into the US GAAP and also merge all the other IFRSs into the US GAAP, in a stop consonant of 5-7 years (Lamoreaux, 2011). I think that the condorsement approach is significant because such an exclusive hybrid approach would likely lessen the tension on the financial reporting method. The condorsement strategy necessitates the classification of the current US GAAP standards into various