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 are owned by the shareholders, the public companies. Though these organizations are based in different countries and have different ground rules about developing their principles.
IASB vs FASB
The main difference between IASB and FASB is that IASB is based in London while FASB is based in the United States. IASB develops and issues financial reporting standards. FASB sets the highest quality standards which are known as Generally Accepted Accounting Principles (GAAP). The IASB is in existence since 2001 while FASB is in existence since 1973.
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 to develop 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’s interests in the United States. They provide the users with clear and useful financial statements and information.
Comparison Table Between IASB And FASB
| 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 Boards. 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 public interest’s. They ensure that their work fosters growth and long-term financial stability.
IASB is the one form of the three-tier IFRS foundation. It is seen by the trustees of the IFRS foundation. 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 but eventually get 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’s Principle Board aka 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 proud itself in providing users, 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 the 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 Boards. FASB stands for Financial Accounting Standard Boards.
- 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.
Conclusion
IASB and FASB are both non-profit organizations, who develop ground rules in their respective states to look over the financial market. IASB is a London-based organization that develops, approves, and issues IFRS standards to make sure that these standards bring transparency and efficiency in accountability. IASB is a private company and it receives its funding through private investors or donors.
FASB is a US-based organization whose primary goal is to set GAAP, quality standards. They ensure that the users get clear and useful financial information. As of 2020, the FASB has seven board members and more than 60 staff members to support them. FASB strives to set the highest quality standards and use all the information to weigh up the expected benefits against the costs of providing it.
References
- 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