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Revolution in International Financial Reporting

A revolution is occurring in financial reporting as companies recognize the need for one set of global standards. In the past, many countries used their own standards or those of larger countries, but now over 149 jurisdictions are using International Financial Reporting Standards (IFRS). Experts note that in today's globally connected markets, a single set of high-quality standards is needed for efficient capital allocation and communication across borders. IFRS adoption is growing as it becomes the most practical way to achieve consistent financial reporting worldwide.

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40 views

Revolution in International Financial Reporting

A revolution is occurring in financial reporting as companies recognize the need for one set of global standards. In the past, many countries used their own standards or those of larger countries, but now over 149 jurisdictions are using International Financial Reporting Standards (IFRS). Experts note that in today's globally connected markets, a single set of high-quality standards is needed for efficient capital allocation and communication across borders. IFRS adoption is growing as it becomes the most practical way to achieve consistent financial reporting worldwide.

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HUPGUIDAN, GAUDENCIA
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We take content rights seriously. If you suspect this is your content, claim it here.
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Revolution in International Financial Reporting The age of free trade and the interdependence of

national economies is now with us. Many of the largest companies in the world often do more of their
business in foreign lands than in their home country. Companies now access not only their home capital
markets for financing but others as well. As this globalization takes place, companies are recognizing the
need to have one set of financial reporting standards. For globalization to be efficient, what is reported
for a transaction in Beijing should be reported the same way in Paris, New York, or London. A revolution
is therefore occurring in financial reporting. In the past, many countries used their own set of standards
or followed standards set by larger countries, such as those in Europe or in the United States. However,
that situation is changing rapidly. A single set of rules, called International Financial Reporting Standards
(IFRS), is now being used by over 149 jurisdictions (similar to countries). Here is what some are saying
about IFRS. • “The global financial crisis that began in 2007 and continues today provides a very clear
illustration of the globally connected nature of financial markets and the pressing need for a single set of
high quality global accounting standards. That is why the G20 … has supported the work of the IASB and
called for a rapid move towards global accounting.” [Michael Prada, chairman of the IFRS Foundation.] •
“Large multi-national companies stand to realize great benefits from a move to a single set of standards.
Companies will have more streamlined IT, easier training, and there will be better communication with
outside parties. In fact, the move to IFRS is not so much about the accounting but about the economics
of a shrinking world.” [Sir David Tweedie, former chairman of the IASB.] • “The added costs from having
to use this complex hodgepodge (different country reporting standards) of financial information can run
in the tens of millions of dollars annually. In the international arena, they can act as a barrier to forming
and allocating capital efficiently. Thus, there are growing demands for the development of a single set of
high quality international accounting standards.” [Robert Herz, former chairman of the FASB.] • “The
current and growing breadth of IFRS adoption across the world suggests that IFRS has become the most
practical approach to achieving the objective of having a single set of highquality, generally accepted
standards for financial reporting. Those who share this belief are influenced by the fact that the IASB's
structure and due-process procedures are open, accessible, responsive, and marked by extensive
consultation.” [KPMG Defining Issues.] • “Developments such as the shocks of the Asian financial crisis,
the Enron and WorldCom scandals, and Europe's creation of a unified financial market helped build
consensus for global accounting standards. Every relevant international organization has expressed its
support for our work to develop a global language for financial reporting.” [Hans Hoogervorst, chairman
of the IASB, June 2013.] What these statements suggest is that the international standard-setting
process is rapidly changing. And with these changes, it is hoped that a more effective system of
reporting will develop, which will benefit all

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