Harmonizing Accounting Standards for Global Equity Markets
I am in agreement with IOSCO of which the Securities and Exchange Commission (SEC) is a member that the financial reporting across the globe should be standardized. The U.S. SEC has proposed that the U.S. GAAP be replaced by IFRS which would allow financial information to flow globally without having to be adjusted.
My reasons for agreeing start with the fact that the world as we know it is becoming more global in nature. Businesses are expanding their boundaries into foreign countries to remain profitable. People are able to travel more, and even if you can’t physically get to the products you can get there via the internet.
Companies have had to change with the times, the world has become global and ...view middle of the document...
Operating in these countries require that the companies abide by their laws and accounting standards in addition to the ones imposed by their own country.
Let’s look at Ford Motor Company and Honda. Ford is a publicly traded company in the U.S. so must adhere to U.S. financial reporting standards and regulations. Honda must abide by these same standards since it is publicly traded in the U.S. even though it is based in Japan.
Ford follows U.S. Generally Accepted Accounting Principles (GAAP) and Honda follows Japan GAAP which is equivalent to International Financial Reporting Standards (IFRS). This means adjustments must be made to any financial reports that Ford does globally because it uses US GAAP and Honda must do adjustments to any reports that it submits in the US because they use Japan GAAP. This means a lot of rework, wasting time and adding cost to report financials. One of the cons of not going to (IFRS) is that it will cost companies currently following US GAAP time and money to convert over to IFRS. My thought is it would be a one- time conversion and would save money going forward. As for domestic companies that are not currently global, it will ensure they are prepared in the event they globalize.
Austin, Stephen G. (May 18, 2009). Major Differences in U.S. GAAP & IFRS and Latest Developments. Retrieved March 9, 2013, from
Epstein, Barry (2/4/2011). US GAAP to IFRS Accounting Transition Overview. Retrieved March 9, 2013, from
Suttle, Rick (What Are the Biggest Expenses of Manufacturing? | eHow.com from http://www.ehow.com/info_12152458_biggest-expenses-manufacturing.html#ixzz2N0vlolna