The Accounting System Before International Standards

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The phenomenon of globalization has interconnected the world at all levels. The accounting system standardization through IFRS adoption worldwide is one of the steps that countries and multinationals have to deal with. The IFRS standards stems from that will of implementing a global single set of high-quality standards in order to facilitate international trades. First, we will have a look on the former global accounting system before the introduction of IFRS standards; then, how globalization pushed to an accounting standardization and its impacts on the world’s economy; and to illustrate that point we chose to study the Korean IFRS adoption and its lessons. II. HOW WAS THE ACCOUNTING SYSTEM BEFORE INTERNATIONAL…show more content…
It has been highlighted that different national accounting standards impair the ability of companies to increase capital in international markets. In response and in order to stimulate the appetite for the need of harmonizing accounting standards, the International Accounting Standards Committee (I.A.S.C.) was formed in 1973 to develop global accounting standards. The I.A.S.C. now acts as an umbrella organization similar to the Financial Accounting Foundation (FAF) in the US. The I.A.S. Board’s objectives are to develop a single set of high quality standards, understandable and enforceable to everyone. Set a global accounting standard that requires transparent and comparable information in general purpose, financial statements while cooperating with the national accounting standard-setters to achieve convergence in accounting standards around the world. The purpose of it was to bring more comparability and transparency in financial reporting and a greater participation in the global financial markets. Such standards would facilitate comparisons among companies, financial performance across countries and increase efficiency in the allocation of resourcing. III. GLOBALIZATION AND INTERNATIONAL ACCOUNTING STANDARDS I.F.R.S. and U.S. G.A.A.P. Formerly when investors would analyze financials of companies across the world they were questioning the truthfulness and transparency of these numbers especially if they wanted to
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