A major problem in convergence of accounting standards is the objectivity and subjectivity of standards of the two boards. The standards set out by IASB are more objective in nature whereas the standards issued by FASB are comparatively more subjective. The article highlights the problems in convergence of accounting standards as each board views the standards promulgated by it are most appropriate.
The chairman of the President’s Economic Recovery Advisory Board suggests that practitioners in America view that standards issued by FASB are most appropriate. However it would create a biased environment on the subject and convergence would become difficult. A single country cannot tackle the diverse issues of global economy and collaboration among several countries is quite necessary. This recommendation was also iterated by leaders of the G-20 as they suggested that standard setting boards should increase their efforts in establishing a common set of standards which are applicable both locally and globally. The article ends by highlighting the major areas that FASB will cover during convergence of various accounting standards. Herz suggests that due to major problems in current accounting treatment of loans the board is trying to implement new standards with IASB which provide better audit ability and practicality. Accounting for income taxes is also one of the key areas that will be covered in the convergence process to streamline income tax accounting issues in different regulatory environments. Accounting for insurance contracts is also on the priority list of FASB as there are several standards related to these contracts which create numerous problems and a single standard could resolve these issues (Defelice).
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