This video compares the Financial Accounting Standards Board (FASB) to the International Accounting Standards Board (IASB). The FASB is the standard-setter for Generally Accepted Accounting Principles (GAAP) in the United States. The IASB is the standard-setter that creates International Financial Reporting Standards (IFRS), which have been adopted by more than one hundred countries. The FASB and the IASB have a similar structure: each has a set of board members that are selected by a foundation that also provides oversight. Both the FASB and the IASB are also supported by an advisory council and an organization the addresses issues of divergent accounting practice (for the FASB this is the Emerging Issues Task Force; for the IASB this is the IFRS Interpretations Committee). The size of the IASB board is roughly double the size of the FASB board because the IASB has members from around the world.

Here’s the main difference:

  • The FASB is the standard-setter that creates Generally Accepted Accounting Principles (GAAP) for companies in the United States

  • The IASB is the standard-setter that creates International Financial Reporting Standards (IFRS), which have been adopted by more than one hundred countries

Another important difference is that the standards issued by the FASB tend to be rule-based (and thus more complicated) while the standards issued by the IASB tend to be principles-based.

The FASB and the IASB are similar in terms of their structure, however.  Both organizations have a set of board members (although the IASB has more than twice as many board members as the FASB) that are selected by a foundation that also provides oversight.  Both the FASB and the IASB are also supported by an advisory council and an organization that addresses issues of divergent accounting practice (for the FASB this is the Emerging Issues Task Force; for the IASB this is the IFRS Interpretations Committee).

The FASB and the IASB worked for years on a convergence project that was intended to make their standards similar.  It was hoped that one day, U.S. companies would have the option of adopting IFRS.  However, it no longer looks like that is going to happen.  I could tell you the long, sad story of how this happened, but I instead encourage you to live your life.  Go enjoy a quiet hike in the woods or take up surfing as a hobby—but watch out for sharks, those things are hardcore.