Question

Discuss the trend relative to the accounting principles in U.S.A. and the international accounting principles (convergence project).

Answer 1

Discuss the trend relative to the accounting principles in U.S.A. and the international accounting principles (convergence project)?

Solution:

In the light of universal requirement from the stock exchange regulators, speculators, organizations, and auditing firms for a sole arrangement of high quality, worldwide accepted accounting standards, in excess of 100 nations presently permit freely held organizations to utilize International Financial Reporting Standards set by the International Accounting Standards Board in London.

The American Institute of Certified Public Accountants trusts U.S. acceptance of a solitary arrangement of high quality, widely acknowledged accounting standards will profit U.S. financial markets and public companies by empowering arrangement of straightforward and similar financial reports all over the world. The American Institute of Certified Public Accountants is basically focused on providing the profession of accounts with the advances techniques and tools required to understand and employ the new set of standards.

The American Institute of Certified Public Accountants is involved in a strong discussion at the Securities and Exchange Commission over the most ideal route for the U.S. to accept such principles, if applicable. In view of surveys done by the members, the Institute trusts that a time frame of three-to-five-years will be required for public companies and the accounting professionals to effectively convert into International Financial Reporting Standards. Therefore, the American Institute of Certified Public Accountants has asked the Stock Exchange Commission (SEC) to set a "certain date" for any future International Financial Reporting Standards implementation provided that specific key developments are accomplished.

Meanwhile, the American Institute of Certified Public Accountants proceeded “convergence” of specific accounting standards between International Financial Reporting Standards and U.S. generally accepted accounting principles with the objective of substantial accomplishment of work between the International Accounting Standards Board and the Financial Accounting Standards Board Financial Accounting Standards Board amid 2013; an objective supported by G-20.

The American Institute of Certified Public Accountants additionally supports a lasting, autonomous funding mechanism for the International Financial Reporting Standards Foundation, the administering body of the International Accounting Standards Board(Tan, A, 2016). The American Institute of Certified Public Accountants persuaded the SEC to utilize the part of the present levy on U.S. public organizations for accounting standards setting activities as a U.S. funding involvement to the International Accounting Standards Board (Grossman, A. , 2016).

The Securities and Exchange Commission is a statutory body and possesses the authority over accounting standards utilized by organizations whose securities are traded in an open market on U.S. exchanges, for example, the New York Stock Exchange and the NASDAQ. Securities and Exchange Commission permitted utilization of International Financial Reporting Standards for U.S. financial reports documented by outside publicly-held organizations that utilize International Financial Reporting Standards in their nation of origin. The Securities and Exchange Commission has taken an initial step towards permitting all U.S. public organizations to utilize International Financial Reporting Standards in mid 2008 when it projected a draft guideline and specified a certain period with major standards for the adoption of International Financial Reporting Standards. The Securities and Exchange Commission met for the voting to issue an announcement of its position favoring International Financial Reporting Standards and convergence of U.S. and international accounting standards guiding the staff to execute a Work Plan to help the Commission in assessing usage of International Financial Reporting Standards by U.S. organizations. An official conclusion with respect to whether to incorporate International Financial Reporting Standards into the financial reporting framework for U.S. issuing companies now rests with the SEC Commissioners and there is no assessed date for when such a decision will be made.

International Financial Reporting Standards are the accounting standards created by the International Accounting Standards Board that are turning into the worldwide standard for the preparation of public organization financial statements. The International Accounting Standards Board is an autonomous accounting standard setting body that is equivalent to FASB internationally, which sets U.S. generally accepted accounting principles. Like FASB, the International Accounting Standards Board follows a thorough, open due procedure to create norms and participates with national accounting standard setters around the globe. The International Accounting Standards Board is governed by the International Financial Reporting Standards Foundation.

The American Institute of Certified Public Accountants representing Council acknowledged the IASB as an international accounting standard setter, giving American Institute of Certified Public Accountants part Certified Public Accountants the choice of utilizing and evaluating International Financial Reporting Standards for SME’s for privately owned businesses.

REFERENCES:

Tan, A., Chatterjee, B., Wise, V., & Hossain, M. (2016). An investigation into the potential adoption of international financial reporting standards in the United States: Implications and implementation. Australian Accounting Review, 26(1), 45-65.

Grossman, A. M., Smith, M., &Tervo, W. (2016). Measuring the Impact of International Financial Reporting Standards on Market Performance of Publicly Traded Companies.