Yesterday, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) agreed to start eliminating the major differences between their rules. This is the first major step towards the creation of global standards – as the two groups cover companies in the U.S. and nearly 50 other countries.
As part of the goal to reach “convergence,” the groups first will tackle major philosophical differences in their approaches to rule writing (i.e. rules-based in the U.S. versus principles-based elsewhere) – and also will conduct major rulemaking projects together. The tentative goal to have the first set of uniform standards worked out by 2005 (which is the time by which European Union companies are required to adopt IASB standards).