International Convergence Of Accounting Standards

The effort of moving towards international convergence of accounting standards has risen since the end of World War II, resulting to the revolution of financial reporting. â€Å"IFRS for example are accounting standards issued by the IASB, an independent organisation based in London, UK† (Ball, 2006). IASB is primarily established to promulgate IFRS and are responsible to set rules that can be equivalently implemented by public companies internationally. Uniform accounting standards are simply demanded in order to produce a comparable accounting information as many big companies begin to enlarge their territory beyond their home country. Therefore, many professionals believe that a transparent and understandable financial reporting could be produced by using uniform standards. However, the competency of uniform standards alone in producing uniform financial reporting is arguable due to significant factors. The existence of varieties in capitalism by individual countries have r estricted the ability of uniform standards in regulating local financial reporting. Plus, the distinction in institutional influences make it harder for uniform standards to work efficiently in various political conditions and to agree with different types of regional legal structures. Besides, cultures and religions also play an important role in accounting industry as they have the power to shape national economies. Therefore, regardless of many benefits that uniform standards could bring, there areShow MoreRelatedThe Convergence of Two Accounting Systems and the International Financial Reporting Standards1318 Words   |  5 PagesI. Introduction The convergence of two accounting systems, the US GAAP and International Financial Reporting Standards, is not a new concept. 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