Convergence And Comparability Of Financial Reporting

1560 WordsNov 1, 20147 Pages
1. Introduction It has been argued over years that Convergence of financial reporting is possibly one of the most important and controversial topics in accounting and corporate governance across countries, of which I could not wholly agree them. The Issue of the convergence of the National Accounting Standards with International Financial Reporting Standards (IFRS) among policy makers, standard setters, regulators, professional bodies, and companies worldwide has peaked up and widely been discussed lately. (Yu Chen & Zabihollah R 2012) Convergence has become increasingly critical across nations in accounting mainly due to the global economy and need of international capital market. In the light of that, a demand arose for standardization of financial reporting in order to enable users of accounting reports among different countries to read, understand appropriately and being in a position of analyzing financial statements came from different countries. However, the paper argues that the link between convergence and comparability of financial reporting is to be questioned when it comes to different countries such as China. There are both strong opponents and proponents of convergence. The proponents of convergence point out that the benefits of global financial reporting bring up the greater comparability of financial information for investors (PricewaterhouseCoopers, 2007) and the strengthening of investors’ confidence. The opponents claimed that the limitations of
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