Question

As the globalization of business continues, it becomes more and more important for financial accounting standards to be uniform across countries. At this time, FASB and the International Accounting Standards Board are working jointly on convergence, a process to develop a common set of standards that would be accepted worldwide. These standards, called international financial reporting standards, ultimately will be applicable to for-profit businesses in more than 150 countries, including the United States. Needless to say, a large number of details must be worked out, and differences between current US and international standards must be resolved. Thus, it is expected that the total convergence will not occur before 2015. Also, the impact of international standards on not-for-profit organizations is uncertain at this time.

What do you think? Should financial accounting standards applicable to for-profit businesses apply worldwide as opposed to country by country? What is the rationale behind your opinion? Should not-for-profit organizations be subject to international standards? Support your position.

Answer 1

Application of financial accounting standards should be applicable word wide as compared to country by country as it would make the financial statements across all countries comparable. Further, it would reduce the reconciliations needed to be done to match the financial statements of one country to another due to difference in accounting standards.

Not-for-profit organizations should also be subject to international standards as it would standardize the reporting requirements. Further, it would also improve the quality of reporting.