The Road to Convergence...One Set of Global Accounting Standards?
Can the Financial Accounting Standards Board and the International Accounting Standards Board Agree on One Set of Global Accounting Standards…and will the Securities Exchange Commission Agree to the Standards adopted?
The Securities and Exchange Commission (SEC) is on record as stating that they are responsible for the protection of American investors, and that they will never compromise that mission. The SEC believes it has set the highest regulatory standards for the ﬁnancial markets of any country on earth as it oversees the Financial Accounting Standards Board (FASB) and approves the FASB’s formulation of accounting principles for US companies. These principles are known as Generally Accepted Accounting Principles or GAAP.
Starting in 2001 the International Accounting Standards Board (IASB), a successor of the 1973 established International Accounting Standards Committee, has been issuing International Financial Reporting Standards (IFRS) for most of the rest of the world to follow when producing ﬁnancial statements (over 100 accounting organizations and 80 countries and 9,000 companies are involved complying with the IFRS).
However, for many years the accounting profession, both within the US and internationally, has recognized the need for one set of high quality accounting standards on a global basis. The accounting profession, as a whole, certainly is in agreement that investors require full and accurate information and that the data behind the information must be reliable and transparent. The goal to set consistent accounting standards and disclosures, which would lead to comparable ﬁnancial statements worldwide and, hence, aid globalization and development, has been in place for decades.
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