What are the disadvantages of moving toward a set of global standards and what barriers need to be overcome to achieve the goal of standardization
Much of the world is moving toward a common set of global accounting standards. Discuss the benefits of having one set of accounting and financial reporting standards around the world, with particular reference to investors and multinational firms. What are the disadvantages of moving toward a set of global standards and what barriers need to be overcome to achieve the goal of standardization?
(ESSAY)
As people need to speak the same language to understand each other while talking, participants on the global market also need to have similar accounting language in order to communicate in between. For that reason, it is not a surprise that the business world is moving towards establishment of International Financial Reporting Standards, which is quite likely that soon will become the global accounting language. Adopting same rules and principles across countries is certainly not an easy task and there are many obstacles to be overcome. But reaching a workable set of standards would bring a lot of benefits especially to multinational companies and large foreign investors.
In my opinion, there are many advantages that speak for IFRS and their further development and adoption worldwide.
First of all, accepting an international set of accounting principles will dramatically decrease the costs for reconciling one company’s financial reports with another’s. Comparing financial statements nowadays is one of the biggest issues for many firms operating on the global market, as accountants across countries follow different rules. With IFRS this process will be much quicker and cheaper, as all reports will be prepared in similar way. It will be easier for companies to make transactions, follow their competitors and control subsidiaries abroad. Large multinational organizations could easily develop their corporate strategies and stick to market trends.
Adopting a common set of accounting standards will definitely bring a lot of benefits to international companies and
(ESSAY)
As people need to speak the same language to understand each other while talking, participants on the global market also need to have similar accounting language in order to communicate in between. For that reason, it is not a surprise that the business world is moving towards establishment of International Financial Reporting Standards, which is quite likely that soon will become the global accounting language. Adopting same rules and principles across countries is certainly not an easy task and there are many obstacles to be overcome. But reaching a workable set of standards would bring a lot of benefits especially to multinational companies and large foreign investors.
In my opinion, there are many advantages that speak for IFRS and their further development and adoption worldwide.
First of all, accepting an international set of accounting principles will dramatically decrease the costs for reconciling one company’s financial reports with another’s. Comparing financial statements nowadays is one of the biggest issues for many firms operating on the global market, as accountants across countries follow different rules. With IFRS this process will be much quicker and cheaper, as all reports will be prepared in similar way. It will be easier for companies to make transactions, follow their competitors and control subsidiaries abroad. Large multinational organizations could easily develop their corporate strategies and stick to market trends.
Adopting a common set of accounting standards will definitely bring a lot of benefits to international companies and