Question

ithin today’s international business environment, there has been a great deal of discussion about the convergence of United States accounting standards (also known as GAAP), with international standards. In two hundred words or more, please comment on this topic. Please use proper citation when posting your response on the discussion board.

Answer 1

Answer:

The increased globalization has brought many benefits to how many businesses interact with other businesses worldwide; however,it has also warranted for a united standards of Accounting practices. Since 2002,the IASB and the US Financial Accounting Standards Board (FASB) have been working together to achieve convergence of IFRS and U.S. GAAP; although both practices have quality standards, there have been a large demand to have a convergence between the two practices. There is no doubt that the world market has drastically changed,and the interaction between nations on a business standpoint is very complex; which leave many questioning the accounting standards and how the differences between the IFRS and U.S. GAAP, affect the business interactions.

In a perfect world it would make complete sense to have the two combined; however, there would be numerous impacts that would affect many nations. The international level such as corporate management, investors, stock markets, Accounting professionals, and accounting standard setters and agencies, would be the majority that would be impacted by the convergence and changes made to the accounting and reporting standards (investopedia). Besides these areas that would be impacted, there are many other circumstances that would need to be considered,such as, the different cultures, ethics, types of economics, political systems,and besides the possible unwillingness of the different nations to comply to these changes, also the time it would take to implement these changes.

On a positive note, the benefits would be simplification, renewed clarity, comparability between various nations,and possibly increase the international investments and capital flow; thus increasing the economic growth for all nations involved. There is no doubt that the positive aspects outweigh the negative, also many should put into account the timeliness and efficiency that it would create; n addition,by having the same standards present globally, there would be a unity among everyone, and it would be a safeguard for possible international economic meltdowns (investopedia). On a personal note, I do believe that although there are many differences between IFRS and U.S. GAAP, they are also very similar, and until there can be a unified accounting standards, which all nations agree on,then the two would create more Chaos and confusion on both sides of those who adhere to each Accounting practices. I do feel that the convergence is inevitable,as more and more nations are interacting more frequently on a business standpoint.