Title

The FASB Approach versus the IASB Approach Regarding Revenue Recognition

Publication Year

2003

Keywords

Accounting, FASB Approach, IASB Approach, revenue

Disciplines

Accounting | Business | Economics | Finance and Financial Management

Abstract

A need to implement a standardized set of accounting principles became apparent following the stock market crash in 1929. The crisis showed that better financial information is vital to assist the capital market system the United States (U.S.) economy relies upon. The Securities and Exchange Commission (SEC) has continuously allowed a private sector organization, currently the Financial Accounting Standards Board (FASB), to establish U.S. standards for financial reporting purposes. These standards are known as generally accepted accounting principles (GAAP). U.S. GAAP is constantly being reevaluated in order to maintain its relevancy. Former Chairman of the FASB, Dennis R. Beresford, wrote, "First of all, our standards, and those of our predecessors and others who provide accounting guidance, have produced the finest financial reporting system in the world." Under SEC regulation, U.S. GAAP has been an adequate system for the U.S. capital markets. However, in light of the abundance of recent accounting and auditing scandals, U.S. GAAP is now being questioned as to its effectiveness. The FASB has been working with the International Accounting Standards Board (IASB) to identify the main differences between the two systems by 2003 and eliminate most of those differences by 2005. Both boards agreed to the project at their meeting in September of 2002. It has been formally acknowledged in the Norwalk Agreement which was the product of their meeting.

The focus of this research is on revenue recognition issues.

Department 1 Awarding Honors Status

Accounting

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