Accountability requires standards. Standards are used in accounting processes to ensure accuracy and continuity of information for intended audiences. Generally Accepted Accounting Principles (GAAP) is the set of standards used in the United States. International Financial Reporting Standards (IFRS) is the set of standard accepted internationally. Each set of rules has similarities and differences. The Financial Accounting Standards Board (FASB) is the entity responsible for developing GAAP and the International Accounting Standards Board (IASB) is the organization responsible for the IFRS development (Beltratti, Spear, & Szabo, 2013). Within recent years the organizations that govern these sets of principles has worked to make them more compatible to each other.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (Ernst & Young, 2013). The FASB and IASB have been working towards ensuring that the concept of fair value will have the same meaning for both GAAP in the United States and IFRS internationally. First there is the issue of defining the meaning of fair value measurement. Also there is the issue of valuation techniques used to determine fair value. And there is the way each board mandates disclosure and reporting of these assets. There are differences within the FASB and IASB concerning different assets, liabilities, and equity instruments are measured at fair value. These are two different sets of rules and that mean assets, liabilities, or equity instruments that are measured at fair value in U.S. GAAP might not be measured at fair value in IFRS. What was done to try to alleviate this was a joint project to have the rules converge so that there would be less confusion between the two accounting systems. Although the fair value measurement guidance in US GAAP and IFRS substantially converged as a result of the project, some...