1. The Norwalk Agreement (2002)
Signed in September 2002, the Norwalk Agreement formalized a historic commitment between the FASB and IASB to make their respective financial reporting standards fully compatible. The boards pledged to eliminate existing individual differences and coordinate their future standard-setting agendas. This joint effort yielded highly converged standards in key financial areas, including Business Combinations (ASC 805 / IFRS 3) and Revenue Recognition (ASC 606 / IFRS 15).
2. The Limits of Convergence
Despite decades of joint work, systemic differences remain due to legal cultures, tax systems, and litigation environments.
┌─────────────────────────────────┬────────────────────────────────┐
│            US GAAP              │              IFRS              │
├─────────────────────────────────┼────────────────────────────────┤
│ Rules-Based Focus               │ Principles-Based Focus         │
│ Extensive implementation guides │ Fewer bright-line safe harbors │
│ Less managerial judgment        │ Requires significant judgment  │
└─────────────────────────────────┴────────────────────────────────┘

The standard-setting bodies have largely shifted from structural convergence to separate paths, while maintaining an active dialogue to prevent further divergence.
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