The following comments were made at an Annual Conference of the Financial Executives Institutes (FEI). There is an irreversible movement toward the harmonization of financial reporting throughout the world. The international capital markets require an end to:
The International Accounting Standards Board is an accounting standard settler that is self-reliant and privately funded. The Board is dedicated to developing, in the general interest, a single set of high-quality, comprehensible, and enforceable international accounting standards that aim to achieve clear and comparable information in general purpose financial statements.
The following categories of stakeholders might benefit from the use of International Accounting Standards:
The basic argument against convergence is that global differences in accounting practices are caused by the economic, legal, social, and other environmental factors. This may mean that harmonization of the accounting standards may not be in the best interest of the users of the accounting information.
Various accounting practices have emerged to serve the purpose of different users; this might suggest that the existing accounting practice is right for a particular nation and should not be altered only to ease the work of international companies or auditors.
The most important obstacle to harmonization is the absolute size and deep rootedness of the differences in accounting. These differences have emerged over the earlier years due to the variations in legal systems and users.
Presented below are comments made in the financial press.InstructionsPrepare responses to the requirements in each item.
a) Rep. John Dingell, at one time the ranking Democrat on the House Commerce Committee, threw his support behind the FASB’s controversial derivatives accounting standard and encouraged the FASB to adopt the rule promptly. Indicate why a member of Congress might feel obligated to comment on his proposed FASB standard.
b) In a strongly worded letter to Senator Lauch Faircloth (R-NC) and House Banking Committee Chairman Jim Leach (R-IA), the American Institute of Certified Public Accountants (AICPA) cautioned against government intervention in the accounting standard-setting process, warning that it had the potential of jeopardizing U.S. capital markets. Explain how government intervention could possibly affect capital markets adversely.
94% of StudySmarter users get better grades.Sign up for free