Will the IASB and the FASB eventually merge, or will they remain separate accounting standard-setting bodies?

We doubt that the IASB and FASB will merge in the future.  First of all, various points discussed in the chapter mean that it is unlikely that the IASB will disappear and the FASB will become the global standard setter.  It also seems unlikely that the FASB will go away.  It is difficult to believe that the United States will cede its authority over accounting standard setting to a multinational group.  Even if the FASB felt that a merger was advantageous, would politicians or even the SEC allow international interests to supersede domestic ones? 

Another issue is principles- versus rules-based standards.  Generally speaking, IFRS are principles-based while U.S. GAAP are rules-based.  While it is true that IFRS are getting more rules-based and U.S. GAAP are (supposed to be) getting more principles-based, the litigiousness of the U.S. environment probably means that the United States will need additional implementation guidance even if IASB and FASB standards are converged.

Financial resources are another consideration.  Operating expenses for the IASC Foundation in 2005 were approximately €12 million (or approximately $15.6 million).  Operating expenses of the Financial Accounting Foundation in 2005 were approximately $31 million.  These numbers suggest that the FASB has a budget twice as large as the IASB.  Whether the IASB can match the resources of the FASB is unclear. 

Taken together, we argue that the IASB and FASB will remain separate accounting standard setting bodies in the future.