An international standard would correct this disparity between the two sets of regulations.
The U.S. Financial Accounting Standards Board (FASB) was established to standardize accounting rules to ensure there was consistency in accounting across the country. Now Generally Accepted Accounting Procedures (GAAP) mean that an investor or stakeholder can review an organization's financial data and know that the rules applied are the same as comparative organizations. The acceptance of the IASB as the primary rule making body for the global business community would achieve the same effect.
Currently, national accounting rules impact accounting numbers. Differences in socioeconomic functions of accounting lead to differences in the processes of accounting regulation as well. Enforcement and interpretation of accounting regulations too is different by nation. Allowing an international body, such as the IASB, to be the primary rule maker would also ensure that enforcement and interpretation was consistent for all organizations, no matter where their home base was geographically located.
Conclusion:
Globalization...
As such, many have chosen to expand to global markets. This includes not only operations outside their home country boundaries, but also financing and investing opportunities. Accounting practices are critical to these strategies. Differences in rules and application of rules by nation can affect both internal communications and external communications with stakeholders. By adopting the International Accounting Standards Board as the primary rule making body for the global business community, there will be a standardized set of accounting procedures globally. These rules will not only be interpreted consistently with the adoption of the IASB, but enforced consistently as well. In this way, organizational financial data can be compared apples-to-apples, no matter where the data originated from geographically.
Works Cited
About Us. No date. IASB. May 8, 2009 .
Gebhardt, G. 2000. The Evolution of Global Standards in Accounting. The Brookings Institute. May 8, 2009 .
Who We Are and What We Do. No date. IASB. May 8, 2009 .
