IASB and FASB are two different companies or organizations. Both of them are related to accounting and have many similar functions, though there are many differences between them in many aspects.
The main function of both of them is to develop financial reporting standards for companies that the shareholders, the public companies, own.
Though these organizations are based in different countries and have different ground rules about developing their principles.
Key Takeaways
- IASB sets International Financial Reporting Standards (IFRS) used globally, while FASB sets US Generally Accepted Accounting Principles (GAAP).
- IASB is an independent international organization, whereas FASB operates under the US Securities and Exchange Commission (SEC) jurisdiction.
- IFRS, under IASB, tends to be more principle-based, while US GAAP, under FASB, is more rule-based.
IASB vs FASB
International Accounting Standards Board (IASB) is responsible for creating International Financial Reporting Standards (IFRS), which are used in over 120 countries. Financial Accounting Standards Board (FASB) sets Generally Accepted Accounting Principles (GAAP) for the United States.
IASB is a part of the IFRS foundation which was founded in 2001 as the successor of IASC (International Accounting Standards Committee).
The foundation is started on the basis of developing IFRS standards to bring transparency and efficiency to the financial market. IASB is an independent body to set standards.
FASB is also a private body for setting the standard in the field of accounting. Their role is to develop standards for public companies in public interests in the United States.
They provide users with clear and useful financial statements and information.
Comparison Table
| Parameters of Comparison | IASB | FASB |
|---|---|---|
| Full-Form | IASB stands for International Accounting Standards Boards. | FASB stands for Financial Accounting Standard Boards. |
| Based in? | IASB is based in London, United Kingdom. | FASB is based in Connecticut, United States. |
| Formed in? | IASB was established on 01 April 2001. | FASB was established on 01 July 1973. |
| Chairman | Johannes Franciscus “Hans” Hoogervorst is the chairman of IASB. | Richard R. Jones is the chairman of FASB. |
| Role | The role of IASB is to develop, enforce and issue IFRS standards. | The role of FASB is to set the GAAP. |
What is IASB?
IASB stands for International Accounting Standards Board. IASB is an independent, standard-setting organization. It is a part of the IFRS foundation.
IFRS is a nonprofit corporation whose objective is to set its constitution and develop quality standard principles. IASB was founded as the successor of IASC. IASB was founded in 2001.
IFRS was previously known as International accounting standards.
The main role of IASB is to develop international financial reporting standards and to promote them. They develop these rules to ensure transparency in the financial market and make accountability efficient with the public interest.
They ensure that their work fosters growth and long-term financial stability.
IASB is the one form of the three-tier IFRS foundation. The trustees of the IFRS Foundation see it. Indeed, the IASB members are appointed by IFRS, and the funding is given by the IFRS foundation as well.
IFRS raises the fund for the IASB. The board members of IASB decide on the standards by vote. Originally there were 14 members, but later they played with the number a few later and eventually got back to the idea of 14 members.
As of 2020, Hans Hoogervorst is the chairman of the board, along with Sue Lloyd being the vice chairman.
What is FASB?
FASB stands for Financial Accounting Standards Board, which is a US-based non-profit organization. The FASB was formed in 1973, replacing the Accounting Principles Board, APB.
FASB sets accounting standards in the public interest for the public companies. The main aim of this organization is to set GAAP, i.e. Generally Accepted Accounting Principles.
Public traded companies, state boards of Accountancy, the American Institute of CPAs (AICPA), and small to high, any size of businesses follow these standards.
FASB is proud of itself for providing users with clear, useful, and relevant information according to their needs on financial matters.
Their priority is to improve the financial reporting in the US market for the benefit of investors or anyone with financial-related information.
FASB also consists of board members to set standards. As of 2020, there are seven board members along with more than 60 staff members, to help. Richard R. Jones is the chairman, along with James Kroeker being the vice chairman.
To be a member of FASB, professional experience is required in the area of financial planning and reporting. These board members come from different sectors, including academia, business, and government agencies.
FAF, aka Financial Accounting Foundation, oversees the FASB and selects the board members.
Main Differences Between IASB And FASB
- IASB stands for International Accounting Standards Board. FASB stands for Financial Accounting Standard Board.
- IASB is based in London, United Kingdom, while on the other hand, FASB is based in the United States.
- IASB was formed in 2001, while FASB was formed in 1973.
- IASB is a part of the IFRS Foundation and the successor of the International Accounting Standards Committee. The FASB replaced AICPA, Accounting Principles Board (APB).
- IASB’s role is to develop, ensure, approve and issue the International Financial Reporting Standards. The role of FASB is to set Generally Accepted Accounting Principles.
- https://search.proquest.com/openview/533367fc5d1ae38a4a477f0971db09a3/1.pdf?pq-origsite=gscholar&cbl=41065
- https://www.sciencedirect.com/science/article/pii/S0882611010000155
- https://meridian.allenpress.com/accounting-horizons/article-abstract/15/3/257/52317
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It’s interesting to see how the IASB and FASB have evolved to maintain transparency in the financial market and IFRS standards globally.
This comparison is insightful and provides a clear understanding of the differences between the IASB and FASB, thanks for sharing.
The role of IASB in setting international financial reporting standards is crucial to ensure accountability and transparency in the global financial market.
The comparison provided highlights the fundamental differences between IASB and FASB, serving as a useful resource for anyone in the accounting field.
The IASB and FASB are two key organizations that have completely different functions in the accounting world and it’s important to know the differences between both of them.
Understanding the core differences between IASB and FASB is essential for anyone involved in accounting, this article does a great job of explaining it.