Gaap or Iars?
Business and Management
Submitted By johaa21
Globalization is imposing professional challenges to the Accounting through out the world. Accounting standards will have to adopt an “official common language” if expansion and investment continue growing as have occurred in the past decade. However, it is difficult to say that exactly in five years the business world will have a standard accounting method due to the many government barriers that such a decision involves.
Accounting has changed in the past decade with low results in approaching one set of accounting standards. However, it has positively changed in the way that easy comparability can be offered so businesses get encouraged to expand beyond borders. For instance, a Japanese investor apprehensive in the language of accounting can actively participate in European stock markets because even if he does not read the local language, he will be able to understand the financial information published by the corporations with which he interacts. However, there is still difficulties when trying to understand some companies reporting methods which lead to scape from those to invest. Gregory Miller - “I think most [global managers] would love to have one set of solid accounting standards, rather than having to deal with "translation" issues.”
A large number of accountants have been actively involved in trying to unified accounting rules and practices around the world. The grow of these groups is getting so big that it can now be consider as another aspect of the globalization accounting that could push for a global standard way to report financial information. According to Sara Eaton, an accountant from University of Toronto, the “International Accounting Standards Board (IASB) is working to replace the many sets of national accounting standards in existence with a single set of global accounting standards”. Their major success to date has been an agreement with the European Union which states that as of January 2005, public
companies in Europe are legally required to use International Accounting Standards (IAS) to draw up their corporate accounts.
In sum, accounting is associated in some of the most rapid changes taking place in the globalizing world. The common language function of accounting is contributing to the creation of a truly global marketplace. Accounting seems to be getting out from the dust room to support the global economy success. Governments ought to agree in essential key decisions to reduce the barriers of having a global standard accounting system in five years.
Eaton, S. Porter, T. Citing Websites. Globalization & Autonomy. Retrieved October 25, 2011, from http://www.globalautonomy.ca/global1/article.jsp?index=RS_EatonPorter_Accounting.xml.
Miller, G. Citing Websites. Harvard Business School. Retrieved October 26, 2011, from http://hbswk.hbs.edu/item/5177.html