Executive Summary
Convergence between the United States (U.S. GAAP) financial reporting standards and those of the International Financial Reporting Standards (IFRS) has been a long time in the making. With developments in the expansion of the global economy, the need for U.S. GAAP and IFRS standards to become more streamlined and similar has only become more prevalent. Accountants and other financial reporters have known for some time that the financial structure of the world is evolving and expanding with each of its economies moving away from segregation and further towards a global capital market. The need for a single set of accounting standards then, to accommodate and ease this transition, is seen as an overriding necessitation. In an effort to raise solutions to this impending need, the IASB and the FASB have continued to convene in an effort to converge standards in one of the world’s biggest markets, the U.S.
The preparation for convergence began in 2002 and has been gathering momentum and support ever since. In an attempt to quicken the process, the IASB and the FASB, have released ‘roadmaps’ which seek to accomplish full implementation by 2009.
Most recently, a roundtable discussion was held to arbitrate issues surrounding convergence; most notably how one standard, instead of the incumbent two, will increase the participation rate of foreign companies in U.S. exchanges, as well as a possibilities of broadening of investor potential.
Convergence thou, is not as straightforward and unhindered as it may seem. Many have spoken out against the implications it will have, with certain parties (including some senior staff at highly respected financial regulators) believing it to be a step in the wrong direction.
The potential implications ...