Universal Accounting Standards - 954 Words

Universal Accounting Standards Issue The internationalization of business activities has increased exponentially over the past 3 decades. Because the accounting standards and practices of different countries have developed in response to diverse environments, accounting has developed with strong national accents . As a result, multinationals with branches and investments in a wide array of countries find it difficult to achieve a consolidated financial report. Further, investors in these multinationals have trouble evaluating financial statements formed from a multitude of unusual (to the investor) accounting standards, forcing them to make less informed decisions. The benefits of a set of uniform accounting standards include†¦show more content†¦Other countries even report that international standard setters appear to have little or no sympathy for the fact that some countries need to incorporate their adopted international standards in national law or regulation. Lastly, with styles of communication diff erent all across the globe, other countries contest that they would have difficulties understanding the ordering of text in the laws of uniform accounting standards since logic and structures are not the same everywhere. 3. Sarbanes-Oxley Act The Sarbanes-Oxley legislation came into force in 2002 and introduced major changes to the regulation of financial practice and corporate governance . The act created a new regulator for the accounting industry: the Public Company Accounting Oversight Board . The regulations put forth are stringent were in response to situations such as Enron. Under current conditions, few, if any, countries accounting standards would pass through all of the regulations of Sarbanes-Oxley. This makes it more difficult to bring the U.S. into the harmonization process. Although steps are being made to harmonize with U.S. standards, there will not be a complete harmonization in the near future for reasons such as the Sarbanes-Oxley Act. Outlook With many major countries and economic blocs accepting IFRS or harmonizing their form of GAAP with IFRS, we are on the right track to creating uniform accounting standards worldwide. 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