A Single Financial Reporting Standard With Full Universal Acceptance

1953 WordsDec 18, 20148 Pages
Establishment of a single financial reporting standard with full universal acceptance is unattainable on various levels. Due to the prevailing economic, political, and cultural environments, it is unconvincing and irrational to have a uniform set of global financial reporting standards. There are controversies regarding the different types of economic systems used worldwide, centralizing the major difference in the systems to be the governmental role and influence on market activity. For there to be a proper measure in comparability in financial statements there is an intrinsic need for a correlated set of economic activities along with an equivalent accounting system. If the US were to adopt IFRS there is a questionable level to the amount of comparison we can recognize for nations under different economic systems. Applying this even further, accounting under a new universal regulation will have economic consequences; changes to regulation will inevitably lead to changes to a nation’s economy. With that said, IFRS is currently not compatible with US corporate governance. Countries, including the US, that decide to converge with IFRS yet function under different economic and political environments will inherently implement the universal standard to fit their institutional infrastructures diminishing comparability between nations (Hail). There are significant differences in the foundation of US GAAP and IFRS, specifically IFRS’s principles-based accounting and US GAAP’s

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