The Financial Accounting Foundation (FAF) is the parent organization for the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). In recent years FASB has occupied itself with the modification of U.S. generally accepted accounting principles (GAAP), more closely aligning them with International Financial Reporting Standards (IFRS). IFRS rules are set by an “international” standards setting body based in Brussels, the aptly named International Accounting Standards Board (IASB). To be fair, the IASB has been working to harmonize their standards with U.S. GAAP as well.

The convergence of U.S. GAAP and IFRS is believed by many as a worthy pursuit leading to the development of a single set of global standards. I won’t spend a lot of time on this, but the idea is more a lofty ideal than a practical goal. IFRS proponents often use as support for their system claims that the rest of world has adopted these “international” standards, without mentioning that most countries make modifications to assuage local special interests as they adopt. Continue reading →