The FASB staff recently issued the second edition of its comparative analysis of U.S. and International Accounting Standards Committee (IASC) accounting standards. The first edition was issued in 1996; the update presents comparisons for standards issued since then and reflects further analysis of older standards.
The stated objectives of the analyses are to provide information that will be useful in assessing whether IASC standards would be acceptable for securities listings in the United States, to create a tool for investors and others to use in comparing U.S. companies with companies that use IASC standards for financial reporting, and to provide a basis for FASB and IASC to raise the quality of their standards while narrowing the differences between them.
The IASCU.S. Comparison Project: A Report on the Similarities and Differences Between IASC Standards and U.S. GAAP appears to be an objective, comprehensive comparison of the two systems. Unlike comparisons before a major sporting event, where each side's strengths and weaknesses are tallied in checkboxes, the study does not provide a scorecard or grading system. Securities analysts and practitioners have reviewed most of the report's chapters, and quotes from their comments are presented to give a taste of how those outside the standards-setting process perceive the differences.
On the surface, IASC standards do not suffer by comparison. Because they were the result of a recent project to develop acceptable core standards, they give the impression of having a greater sense of order and perspective than the more than 100 FASB statements and pronouncements of earlier standards setters. For example, the IASC pronouncements have single standards on financial statement preparation and income recognition. U.S. GAAP has no counterparts: Carrie Bloomer of the FASB staff identified 20 separate U.S. GAAP pronouncements in the process of making a comparison to IAS 1, Presentation of Financial Statements. And to think that IASC has a pronouncement on income recognition and U.S. GAAP does not shows the comparison is by no means one-sided.
A quick review of the document reveals concern on the part of some that the IASC standards are at times vague and ambiguous. On the other hand, it also reveals the cookbook nature of some U.S. standards.
The document is a tribute to the FASB staff for its objectivity and quality. Copies are available for $40 from FASB, at (203) 847-0700, ext. 555, or http://fasbpubs@fasb.org. *
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