In October 2002, the FASB (Financial Accounting Standards Board) and the IASB (International Accounting Standards Board) announced the issuance of a memorandum of understanding ("Norwalk Agreement"), marking a significant step towards formalising their commitment to the convergence of U.S. and international accounting standards. Since then, both boards have been involved actively in a joint project to develop a common conceptual framework.
This would provide a sound foundation for developing future accounting standards which will be principles-based and internationally converged.
An example of such standards is IFRS 13 – fair value measurement, which was jointly issued by the IASB and FASB in 2011 (effective from 2013) as part of the convergence project, and also as a response to the global financial crisis.
You are required to:
- Critically discuss the scope of the new conceptual framework for financial reporting. Compare the new framework with the 1989 IASB framework for the preparation and presentation of financial statements.
- Critically discuss the arguments for and against the use of fair values in the preparation and presentation of financial statements. Your discussion must include comparisons to the historical cost convention.
Your coursework must be in a report format, with an introduction, the main body addressing the above issues, and a conclusion summarising your coursework. All external sources used must be adequately cited and referenced using the Harvard style of referencing.