In the environment of the constantly changing global economy, creating homogenous accounting standards is crucial. Regulated by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), these standards lack homogeneity (International Accounting Standards Board, 2021; Financial Accounting Standards Board, 2021). By converging IASB and FASB, the opportunities for establishing clear and universal accounting standards have been created, thus, streamlining a range of financial processes and improving the efficacy of global business performance.
To test the efficacy of the IASB/FASB roadmap, one might need to check some of the recent global projects. For example, the project regarding the development of criteria for borrowing costs illustrates the importance of IASB/FASB convergence (“IAS 23 – US GAAP convergence project,” 2021). Specifically, the project implies that the capitalization of borrowing costs should be performed (“IAS 23 – US GAAP convergence project,” 2021). The described change has allowed managing the costs more effectively within the global economy.
In the project under analysis, the attempt at setting the standards for the methods of expensing the borrowing costs can be considered one of the key differences that makes it unique compared to other projects. Thus, the levels of asset security have been increased along with the opportunities for flexible asset management. Although operating in the global economy implies dealing with a number of nuances, it is best to accept homogenous standards to ensure that the rights of all parties are protected. In the process in question, the benefits include the opportunity to define qualifying assets more effectively, whereas the possible challenges caused by fluctuating costs represent the key disadvantage. Overall, the convergence between IASB and FASB indicates the development of tighter control over global economic processes, which will allow avoid instances of fraud and misunderstandings.
References
Financial Accounting Standards Board. (2021). Implementing new standards. Web.
IAS 23 – US GAAP convergence project. (2021).
International Accounting Standards Board. (2021). About the International Accounting Standards Board.