This paper comments on the necessity and dream for many of a global set of accounting standards that can function all over the world; however it focuses on the flaws that would accompany this process. It also compares in an interesting way the future of this idea with current crisis in the European market, more specifically the Euro market situation and its currency.
In the first part of the article the author makes a short description on the Euro’s history and comments on the creation of a set of accounting rules for the zone. He comments on the irony of the future survival of these rules, however as of this moment the currency itself has more issues and its future is unclear.
The author then comments on the IFRS adoption rules and goes beyond the question of whether or not they can be standardized. There is more doubt on the fact that it is not sure if the standards will be assimilated by all the countries, what markets will be available, if the rules are meant to serve and what is really driving the global accounting unification. Reilly states that if there is not a common political view or enforcement, this unification is not viable enough.
To assess this panorama, there are two answers available comments Reilly. First, is to see if the Audits firms and legal structures can monitor and see if the same standards are applied throughout the countries. However, there are many countries where national culture can act as a barrier and restricts this approach. Even a global security regulator has been proposed but it would be difficult to the USA to report to this body, Reilly states “it’s likely that such an agency would have limited accountability, would become intensely politicized, and would possibly be even more vulnerable than existing institutions to regulatory capture.”
On the other hand, the second answer relates on how to enforce these standards and if they will...