Bridging The Great Divide : The Merger Of The Financial Accounting Standards Board

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Bridging the Great Divide: The Merger of the Financial Accounting Standards Board and the International Accounting Standards Board As the 21st continues, the economy becomes more entrenched in globalization. A toy store business in America may have multiple suppliers from China; or an American motorcycle manufacturing business may export internationally to Europe, Australia, and Asia. As the business world grew globally, the accounting practices moved from a simple mathematical equation of debits and credits to a complex series of steps, rules, and regulations. As time passed, investors and creditors had difficulty comprehending the financial statements of global organizations, as individual countries followed various accounting…show more content…
standards) and the IFRS (International Financial Reporting Standards). This endeavor began (formally) in 2002, with the signing of the “Norwalk Agreement.” The formal Memorandum of Understanding, which specified the long and short-term projects, was originally put into action in 2006. In “The Norwalk Agreement” four goals were outlined; with the two primary goals listed below: a) undertake a short-term project aimed at removing a variety of individual differences between U.S. GAAP and International Financial Reporting Standards (IFRSs, which include International Accounting Standards, IASs); b) remove other differences between IFRSs and U.S. GAAP that will remain at January 1, 2005, through coordination of their future work programs; that is, through the mutual undertaking of discrete, substantial projects which both Boards would address concurrently... (1). Over the course of the establishment of the IFRS, over 110 countries have adopted partially or fully implemented these standards. This brings the idea of a globalized standard closer to realization, when placed into the perspective that approximately 60% of the world uses one standard; while the U.S. operates on its own unique system. When all
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