ACCOUNTING STANDARDS

Validity of a Single Global Set of Accounting Standards and Its benefits for Owners

Validity of a Single Global Set of Accounting Standards and Its benefits for Owners

Introduction

Do you believe that it is appropriate that we have a single, global set of accounting standard as well as one conceptual frame work that has global applicability?

Over the past couple of decades, there have been different generally accepted accounting principles that have been formed. The cultural, communal, and financial, regulation bonding, law related and litigious environment have given rise to the differences in these conditions. They result in financial statements that are not comparable and difficult for users to interpret. This in turn acts as a barrier for global capital movement, potentially resulting in less than optimal allocation of capital.

The harmonization and eventual convergence of GAAP is the result of heading towards the global standardization of accounting principles. This most important step that has been spearheaded by the IASB or International Accounting Standards Board is the formal committee responsible for this step.

Discussion

There is a great advantage in having a single global set of accounting principles.

However the first important step to maintain this global standard is enforcement, which needs to be generally taken care of on a nation by nation basis. Take for example the fact that in America, the main body that leads the compliance of accounting principle is the SEC. Come to think of it, will it be possible to remain consistent with so many entities regulating the markets. IOSCO has claimed that it will setup an IFRS database for the standardization process of to disseminate decisions on the practical implication of the IFRS (Prada, 2008, pp.21-26).

This technical database will permit international standardization regulators to perceive what their fellow accountants are carrying out in terms of regulation so ...