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Account 420 Initial

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420 Intl ACC
For the International Accounting Standards Board (IASB) and the US Financial
Accounting Standards Board (FASB), convergence is always on top of the agenda. These two
accounting bodies believe that convergence is one integral step in addressing some areas of
significance in financial reporting. There has never been any doubt about convergence bringing
about reliability, straightforwardness, and streamlining in financial reporting.
Transparency and uniformity, however, remain the main objectives of convergence. The
rule-based system of the US GAAP and the principle-based methodology of the IFRS have
without a doubt made convergence more strenuous. While convergence aims at bridging the gap
between International Financial Reporting Standards (IFRS) and US GAAP, there still will exist
some differences between the two.
In the 2008 Memorandum of Understanding, IASB and FASB identified three areas for
convergence. These areas included leases, financial instruments, and revenue recognition while
insurance contracts are also reviewed jointly. The efforts of IASB and FASB are given a boost by
the seconding and support from the US Securities and Exchange Commission (SEC). Microsoft
is an example of a company that uses US GAAP in preparing its financial statements. Oracle, on
the other hand, is another US company that uses IFRS in its financial reporting. An examination

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