The International Convergence Project Assignment

The Inter national Convergence Project - Assignment ExampleGlobalization has undoubtedly contributed to the economic yield in developed as well a developing countries through the principle of comparative advantage and increased specialization. With the benefits of globalization, the policy makers need also recognise the need for uniform disclosures by firms engaged in multinational businesses. As accounting is a universal language for business, it be numbers all the more important to have sound and comparable accounting principles to enable the capital providers, analysts and regulators to understand the health of business and make relevant decisions. Understanding this need the stock(a) setters have come up with the international convergence project for uniform accounting standards. This project includes the discussion on need for uniform accounting standards in modern monetary world. The benefits that accrue on behalf of borrowing of single accounting standard framework by ma jority of the countries have also been provided. Furthermore the empirical evidence post-IFRS adoption by European firms has been included. Lastly the current state of convergence project has been provided. ... Accounting standards play important role in regulation of global monetary markets. This has made it important to establish a single set of high quality financial accounting standards. The function of financial accounting standards is to define the rules for national regulators and participants of capital markets such as banks and borrowing firms. A common accounting language can provide the investors greater confidence in transparency and comparing of financial statements. The global standards are seen as a key to safety of global financial arena. These standards are purported to be means of mitigating the volatility of capital flows across markets, reduction in probability of bankruptcies and reduce systemic risks. The foundation of convergence process was laid in early 2 000s when in 2002 the two major standard setting bodies IASB and FASB formalized their commitment in a Memorandum of Understanding (MoU) to the convergence of IFRS and US GAAP under the Norwalk Agreement (Kieso, Weygandt & Warfield, 2010). The objectives of the convergence of standards were to achieve completeness and repair consistency, as historically both the accounting standards by IASB and FASB have been incomplete. As a result the two boards identified short-term and long-term projects that would eventually give to convergence. Some short-term projects were borrowing costs and fair value accounting for financial instruments, issued in 2007 and since then uniformly followed by both the standard setters. long projects included issues like the conceptual framework, leases and revenue recognition. Additionally European and US regulators have agreed to the recognition of each others accounting standards for firms listed on various world securities exchanges. The international