What is the role of the International Accounting Standards Board (IASB) and the FASB?

• A. They regulate tax policy in most countries.
• B. To converge the standards of IFRS and GAAP into one set of high-quality global rules.
• C. They oversee corporate governance standards.
• D. They publish annual financial reports for major corporations.

Answer: (B)

The main idea is that the two standard-setters work together to bring IFRS and US GAAP closer so financial reporting is more comparable worldwide. The IASB develops IFRS used by many countries outside the U.S., while the FASB maintains US GAAP. Through joint convergence projects, they try to align how common transactions are recognized, measured, and disclosed, aiming to produce a single, high-quality set of rules that reduce differences for investors and preparers. A well-known example is the revenue recognition work that led to IFRS 15 and ASC 606, making revenue reporting more consistent across borders. They also collaborate on areas like leases and financial instruments, though complete unification hasn’t occurred. They do not regulate tax policy, oversee corporate governance standards, or publish the annual financial reports of major corporations; those roles lie with tax authorities, governance bodies, and the companies themselves.