Question

lease explain the original goal/project with the concept of convergence. Is/was this able to be achieved in the past or the future

Answer 1

The convergence of accounting standards refers to the goal of establishing a single set of accounting standards that will be used internationally. In Financial reporting context, convergence is the process of harmonising accounting standards issued by different regulatory bodies. For example, convergence of International Accounting Standards(IAS) and US Standards.

The objective is to produce a common set of high quality accounting standards to enhance the consistency, comparability and efficiency of financial statements.

The idea of convergence has been developed in 1950's and 1960's and was a response to greater economic integration.The International accounting Standards Committe(IASC), before the IASB, was established in 1973 with the goal of developing accounting standards and promoting them internationally.

A single global comprehensive set of accounting standards is a conceptual idea.

• It would help to ensure comparability of financial statements.
• It would allow companies to enjoy a lower cost of capital as a result of their financial statements being more readily understood.
• A single set of accounting standards would ensure lower barriers to the free movement of accountants in business across jurisdictions.

There are so many projects where there is a road to international convergence. For example,

• In March 2002, EU decision to adopt IAS for the consolidated accounts of its listed companies.
• In January 2006, Canada's Accounting Standard's Board approved a plan for convergence with IFRS.

By 2013, there are over 100 countries worldwide that either require or allow the use of IFRS for financial statements and 115 jurisdictions had made public commitments supporting the convergence.

From the above figures we can understand that the goal of the concept of convergence can be achieved within no time. In future it will be achieved.