This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
In September 2002, the International Accounting Standards Board and the equivalent of the U.S. Financial Accounting Standards Board have agreed to work together, in consultation with other countries and regions, accounting bodies, in order to achieve convergence of International Financial Reporting Standards and U.S. GAAP generally accepted accounting principles (GAAP). A group of high-quality global standards remains a priority of the International Accounting Standards Board and the Financial Accounting Standards Board (FASB). Decision reflects a memorandum of understanding (MOU) between the IASB and the U.S. Financial Accounting Standards Board (FASB) call Norwalk Agreement.
Disadvantages of Converge US GAAP and IRFs
Each country has adopted Financial Reporting Standards, it creates an inconsistent financial reports. This will become a problem, investors when they are trying to figure out the differences of accounting reports, when they watch / consider compliance with accounting standards and financial reporting countries to seek funding in the capital of the business they run. International Accounting Standards Board (IASB) to seek a better solution to alleviate the existing cultural differences, different interpretations, to create a simplified accounting standards inconsistencies and lack of financial reporting complexity, conflict and chaos. Differences between U.S. GAAP and IRFS each standard U.S. generally accepted accounting principles, rule-based, IRFS principle-based approach. GAAP by a complex set of guidelines, try to publish the rules and standards of any emergency, and the goal of the International Financial Reporting Standards Report, and then how specific objectives related to the case to provide guidance.
The implementation of the International Financial Reporting Standards is a significant change procedures and information systems related to the time and cost, there may be no corresponding benefit. When changing the procedures and information systems, organizations need to re-install procedures and systems, which will spend a very large amount. The organization also need to send their own staff training, workshops and their workers can do their job more efficiently. For example: organizations to upgrade and change the way you report to maintain the cost to comply with the new standard.
Arguments for and against the convergence of international accounting standards. When convergence is again clear, simplified as much as possible, transparent and comparison between the accounting and financial reporting in different countries. This will result in capital flows and international investment, lower interest rates, and leading to an increase of a particular country and the country to companies doing business on economic growth. All stakeholders timely and uniform availability of information will also be on the concept of smooth and time-efficient process. In addition, the new safeguards to prevent other countries or international economic and financial crisis. Previously, the International Accounting Standards Board, the International Accounting Standards Committee (IASC) is responsible for issuing and implementation of international accounting standards. Of replacement IASC Inter-Agency Standing Committee's work in 2001, the International Accounting Standards Board, and efforts to achieve the own purposes harmoniz [and] around the world, accounting standards, financial reporting global financial markets . Globalization in today's society that allows organizations to integrate operations in markets around the world. Satellite has been set up around the world to allow and expand international exchanges; companies such as Toyota, McDonald's, Nokia, Nike, UPS and countless people in many countries in the ordinary course of business and foreign companies, such as Daimler - Benz and Chrysler, the commencement of their merged.
Advantages of converge US GAAP and IRFS
Currently, companies operating in other countries must be prepared financial statements comply with accounting standards in which country. Japanese accounting principles, in Turkey and in France are different from those in Brazil. This forced the company has a global business transformation and preparation of financial statements to meet each individual national norms. With more and more enterprises to open an office in a foreign country, and increased global transactions it seems obvious that the use and understanding of international accounting standards. Not only a single set of principles for burden lifted prepare the multiple international passenger and the company's financial statements, but it will also provide additional benefits to businesses and investors comparability. Financial statements from around the world will be better able to compare and evaluate the trouble with others. This will benefit U.S. investors and businessmen, as they will have sufficient resources to effectively analyze and compare investment opportunities and make informed decisions. At this time, there are 85 countries and many others are in the process of conversion requires the use of International Financial Reporting Standards (IFRS). Although there are advantages and disadvantages, similarities and differences are converted to U.S. GAAP and International Financial Reporting Standards will benefit a lot.
There are good reasons from the perspective of investors, who want their country overseas investment convergence. The IFRS arose to feed the increasingly global investors needs and the capital markets globalization. Investors can get more relevant, reliable, timely and comparable to the respective jurisdictions. Since the capital markets is globalization and the format of financial reporting is standardise, there was a trend for adoption of US GAAP. By using a set of financial statements prepared by generally accepted accounting principles, to help investors better understand the investment opportunities, rather than using a set of financial statements prepared in different countries accounting principles. For a better understanding of the financial statements, investors must take more time and effort to convert the financial statements so that they can confidently compare opportunity costs. Investor confidence will also be a string is a globally recognized, if the accounting standards. Convergence with International Financial Reporting Standards, contribute to the understanding and confidence of the investors in high-quality financial statements. Today, more than 120 countries adopt and accept the IFRS as its standards for the Financial Statements - and some of them has adopted it as its accounting principles.
In April 2005, the Securities and Exchange Commission (SEC), which is the US corporate regulator equivalent to ASIC, issued a statement setting out a roadmap to eliminating SEC's requirement that foreign private issues reconcile financial statement prepared under IRFSs with US GAAP. Because of the importance to many Australian entities of access to US capital markets, the AASB is also interest in ensuring that Australian entities A-IRFSs will also exempted from reconciliation process. The existence of optional treatments in accounting standard could interesting question to be assessed by the SEC. As reported by the IASB in a press release on 15 November 2007, the SEC allowed non-US companies to issues financial statement in United States without having to reconcile these statement to US GAAP. The SEC currently considering whether to issue a proposed rule that would allow US companies to apply IRFSs. In 2008 the two boards issued an update to the (MOU), which identified a series of priorities and milestones, emphasising the goal of joint projects to produce common, principle-based standards.The Group of 20 Leaders (G20) called for standard-setters to re-double their efforts to complete convergence in global accounting standards. Following this request, inÂ November 2009Â the IASB and the FASB published a progress report describing an intensification of their work programme, including the hosting of monthly joint board meetings and to provide quarterly updates on their progress on convergence projects.InÂ April 2012Â the IASB and FASB published a joint progress report in which they describe the progress made on financial instruments, including a joint expected loss impairment ('provisioning') approach and a more converged approach to classification and measurement.InÂ February 2013Â the IASB and FASB published a high-level update on the status and timeline of the remaining convergence projects. The report includes an update on the impairment phase ofÂ the joint project on financial instruments.
Reference : (Journal Articles)
â- H Daske -Â JournalÂ of Business Finance & Accounting, 2006 - Wiley Online Library
â- Radebaugh, L. H., and D. L. Street. 2003. Segment and foreign operations disclosures. In International
Accounting and Finance Handbook, edited by F. D. S. Choi, Chapter 22. 3rd edition. New York,
NY: John Wiley & Sons, Inc
â-Taplin, R. S. (2004). A uniï¬ed approach to the measurement of international accounting harmony. Accounting and Business Research, 34(1), 57-73.
â-Norris, Floyd. " The Rush to International Accounting." Notions on High and Low Finance. 11
Sept 2009. The New York Times, Web. 13 July 2009.
â- Cox, Christopher. "U.S. Moves Toward International Accounting Rules." DealBook. 27 Aug
2008. The New York Times, Web. 11 July 2009.
â- CPAJ, . "The CPA Journal." Business Week. Nov 2008. BX, Web. 16 July 2009.