Will there be one set of accounting standards in use throughout the world in the next five years?
There is a global call for standardization of accounting standards. Today, this standard is known as International Financial Reporting Standards (IFRS). Is it very common for non-U.S. companies to be listed on the New York Stock Exchange. This makes the need for an accounting standard necessary in order for financial reporting to be understood on an international level. Standardization is already taking place in the world, the U.S. simply needs to follow suit.
The U.S. Securities and Exchange Commission (SEC) now allows foreign companies that are listed in the New York Stock Exchange to use IFRS. In prior years the SEC required such companies ‘to reconcile their financial statements prepared under home country standards to U.S. generally accepted accounting principles (GAAP)’ (Mintz, 2010). The decision to allow foreign companies to report IFRS shows a movement in the direction of standardization.
There are currently over 100 countries that have adopted IFRS. The United States has not yet adopted this standard as we are currently using U.S. GAAP. However, in February 2010, the SEC released an announcement in reference to its stance on supporting and their belief that a single global accounting standard will benefit U.S. investors. This appeared to be the U.S.’s first step in the direction of adopting IFRS. Although this movement has been underway for 40 years, it has not yet been adopted. In my opinion, and with the research I have been able to compile, it appears that we are moving forward. I do not feel that 5 years time is an appropriate transition period. That is, ‘implementation of the new standards will require education and training, adapting data processing procedures, an understanding of how they will affect the presentation of the financial statements and consideration of presentation alternatives.’(Woods, 2012)
According to Mintz (2010),...