The growing capital market has made people focus on Financial Reporting. Cross border investment and business has created a need for Globally Accepted Accounting Standards. The process of harmonization is accepted as the key factor to implement a single set of standards, which includes adopting global standards, MOM between International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB).
With one core set of standards, any company using them can list on any stock exchange anywhere in the world without having to reconcile their accounts to local standards, as they do now... It will break down barriers to investment and trade and ultimately reduce the cost of capital and Stimulate growth.
As the world becomes a global capital market, financial reporting takes center stage. Harmonization is the buzzword in the world of accounting and reporting today. With exponential growth in cross-border investment and trading, there is a pressing requirement for globally accepted accounting standards. Practical difficulties notwithstanding, the benefit of curtailing expenses in producing two sets of financial reports, and greater comparability and transparency can be achieved with a single set of reporting standards. The dominant role of financial markets, the need to reduce informational costs and the need to bring about uniformity and increased presence of institutional investors in foreign markets are also a few factors that are forcing domestic companies to demand globally applicable accounting rules. Most countries have responded favorably to these demands, and convergence has started, though at a snail's pace.
In a scenario dominated by accounting standard-setting bodies, regulatory bodies, professionals and academicians for harmonizing the diverse accounting practices, the first breakthrough was reached in May 2000 when the International Organization of Securities Commission (IOSCO) accepted 30 core International Accounting Standards. This endorsement by IOSCO for the use of International Accounting Standards by member stock exchanges, led to acceptance and recognition of the International Accounting Standards Committee (IASC) as a worldwide standard setter. This was followed by the reformation of IASC to International Accounting Standards Board (IASB) in 2001. Consequently, IAS, now renamed International Financial Reporting Standards (IFRS), have been brought into the limelight. |
