Question

“Implementation of a Single Set of Accounting Standards Worldwide in the Era of Globalization” Present a conclusion to your topic. On one page with reference.

Answer 1

International Financial Reporting Standards

IFRS is a single set of accounting and financial reporting standards developed by the International Accounting Standards Board (IASB). They are intended for global use by entities in all types of economies – from developing countries to emerging markets to well-established industrialized nations. The purpose of IFRS is to provide financial statement users with consistent and comparable information across borders. According to the IFRS Foundation, the standards are currently legally approved for use in over 100 countries, including the European Union countries and more than two-thirds of the nations comprising the Group of Twenty (also referred to as the G20). Further, 52% of Fortune Global 500 companies use IFRS.

The IASB and the Financial Accounting Standards Board (FASB) began working toward convergence of international and US accounting standards in 2002, when the two boards jointly issued a Memorandum of Understanding (MOU) announcing their collaboration with the objective of creating a single set of high-quality global accounting standards. In 2006 and again in 2008, the boards updated the MOU, and since commencing the convergence project, the FASB and IASB have tackled a number of projects together with varying outcomes. The most notable success of the project came in May 2014 with the concurrent release of a converged revenue recognition standard. Other high-profile projects, such as lease accounting and financial instruments, have resulted in differing approaches being taken by the two boards.

Although the FASB and IASB have participated in convergence projects and collaborated in some areas, there are still many differences in the two sets of accounting standards. One of the fundamental areas of divergence between the two sets of accounting standards is the increased focus on fair value measurement of assets and liabilities in IFRS. Many have expressed concern that convergence between the FASB and IASB is essentially over, but officials with the IFRS Foundation and FASB have both expressed a continued commitment to working toward making standards more comparable.

As financial information is primarily driven by accounting standards, the staff has had a keen interest in IAS and the developments related to those standards. As we worked in the area of IAS, we heard from issuers and others about the requirements to access the US markets. One of the things we heard was that having two sets of financial statements - one set that has been prepared in accordance with IAS and the other which has been prepared in accordance with U.S. GAAP - was difficult for users to understand. Companies would report the results of their operations under the two sets of standards and, in some instances, those results would be markedly different. As a result of reporting under two standards, the company would have the challenge of explaining that both sets of financial statements were "correct", even though the amounts reported showed different results, sometimes significant in amount.