Globalization And Convergence Of Us.gaap Ifrs Standard As Prescribed By The Security And Exchange Commission ( Sec )

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There is a clear roadmap to social globalization and convergence of US.GAAP – IFRS Standard as prescribed by the Security and Exchange Commission (SEC) for users that set up financial statements in accordance with IFRS as issued by IASB. This followed would lead to a worldwide adoption of IFRS over the next few years. In his work, Barry (2009, p.26-27) states, “The advantage of a single set of financial reporting standards are manifest, particularly as internationalization of business activities became the norm. In particular, having uniform, high quality standards has been extolled as fostering international business relationships, with the goal being the facilitation of cross border capital flows and lowering the cost of capital _ the expected results of the anticipated reduction of perceived accounting risk”. It has been argued that uniform financial reporting standards will result in lowered cost of capital, where investors will be willing to accept lower returns interest from their investment in corporate securities. This will be achieved when the riskiness of their investment is reduced to the acceptable level. To improve an investors’ confidence, the SEC provides domestic registration of foreign entities and reconciliation to U.S. GAAP from respective national GAAP. This means that IFRS has gained a much broader acceptance even in the European Union especially when the EU imposed the IFRS-based reporting an all publicly held EU-based companies (for consolidated

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