Accounting Convergence - 1153 Words

Accounting Convergence: Advantages and Disadvantages Winston Churchill once said that â€Å"there is nothing wrong with change, if it is in the right direction† (Thinkexist.com) . Today, the accounting profession and standards in the United States is facing one of the biggest changes it has seen in a long time: the convergence of its Generally Accepted Accounting Principles (GAAP) to the International Financial Reporting Standards (IFRS). Is this a step in the right direction for the United States? The debate is still alive, although the change is happening now. In this paper I will explain the convergence and then describe some of the advantages and disadvantages to this change. Convergence is a term that means â€Å"the coming together or†¦show more content†¦GAAP has been around for many more years than IFRS has. Is this an advantage or disadvantage for a move towards IFRS? Some people would argue that it is a disadvantage because the U.S. GAAP covers almost all possible accounting issues and has also shown sustain ability through its years in practice. On the other side, the advantage to having a newer set of standards is that they will not be as cluttered as the U.S. GAAP. But doesn’t the word â€Å"convergence† mean to eliminate the differences between the two standards? So we would be blending the best of both sets of standards and both of these arguments would be illogical, right? That brings us to another debate about the convergence with IFRS. If the business world would flow better with one set of accounting standards, why are we trying to blend the two accounting standards instead of just adopting IFRS? If over 100 countries and counting have switched to IFRS, why can’t the U.S. do the same so that one set of standards will really be attained? According to Intermediate Accounting, some of the standards between U.S. GAAP and IFRS that differ and are long-term projects for convergence are issues such as revenue recognition, the conceptual framework, and research an d development costs (18). All of these issues are currently being worked on between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB). An advantage to the conceptual frameworks for both U.S.Show MoreRelatedThe Convergence Of Accounting Principals926 Words   |  4 PagesThe Convergence of Accounting Principals When it comes to financial accounting, there are two sets of standards that seem to have incongruent rule and principal based views on the way things should be done. These standards include the Generally Accepted Accounting Principals (GAAP), which is rule based, and International Financial Reporting Standards (IFRS), which is principal based (Waybright p.260). Despite opposing views, the two have been attempting to fully converge since 2002. HistoricallyRead MoreInternational Convergence Of Accounting Standards1494 Words   |  6 Pageseffort of moving towards international convergence of accounting standards has risen since the end of World War II, resulting to the revolution of financial reporting. â€Å"IFRS for example are accounting standards issued by the IASB, an independent organisation based in London, UK† (Ball, 2006). IASB is primarily established to promulgate IFRS and are responsible to set rules that can be equivalently implemented by public companies internati onally. Uniform accounting standards are simply demanded in orderRead MoreThe Convergence of Two Accounting Systems and the International Financial Reporting Standards1318 Words   |  5 PagesI. Introduction The convergence of two accounting systems, the US GAAP and International Financial Reporting Standards, is not a new concept. For many years, the primordial idea of convergence started in the late 1950’s in response to post World War II economic integration and related increases in cross-border capital flows. Initially, the term used was â€Å"Harmonization until the early 1990’s the politically correct term is â€Å"Convergence†. It has been in deliberation to whether all countriesRead MoreWhy The Aicpa Is Becoming More Popular1408 Words   |  6 PagesAs many students graduate high school throughout the United States, a degree in accounting is becoming more popular. Many students realize that being an accountant offers a high-paying salary and a very stable job market. Although this may sound appealing, the process in reaching this gratitude may be difficult for some. In most cases, one must become a Certified Public Accountant (CPA) or a Certified Management Accountant (CMA). To becoming certified, you must pass the exams the American InstituteRead MoreEvolution of Accounting Thought6174 Words   |  25 Pages Hendriksen and Michael F. van Breda, Four Thousand Years of Accounting, Chapter 2 of Accounting Theory, 5th edition, Irwin, 1992 Accountancy, from Wikipedia, http://en.wikipedia.org/wiki/Accounting. Retrieved January 20, 2011. Contents of lecture notes: 1. Introduction 2. Why bother with the history of accounting? 3. The beginnings 4. So what is ‘accounting’ (or ‘accountancy’)? 5. Double-entry accounting 6. Why double-entry accounting? 7. The period 1500 to 1800 8. The period 1800 to 1955 9. TheRead MoreAcc 541 Accounting Standards Board Paper1116 Words   |  5 PagesAccounting Standards Boards Leslie Brian ACC/541 November 14, 2011 Delphine Agnor Wolsker Accounting Standards Boards The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significanceRead MoreEffect of Globalisation on Management Accounting6683 Words   |  27 Pagesthe development of accounting (based on research by Gray and Hofstede (1988), Robson (1991), and Doupnik and Salter (1995)), came to the conclusion that accounting developed because of the complex interaction between it and the external environment. Therefore management accounting, as a role player in the business environment and a subfield of accounting, has by no means been unaffected by the drivers of change. Siegel and Sorensen (1999:3) contend that management accounting should undergo perpetualRead MoreAuo 1 Study Guide Essay12292 Words   |  50 PagesAshley Richardson 11/15/2013 Western Governors University AUO1 – Auditing and Information Systems Additional Study Questions/ Study Guide 1. Accounting Information Systems Competency 302.1.1: Nature and Purpose The student understands the nature and purpose of information systems. * What is the difference between transaction processing systems, management information systems, and decision support systems? 2. Transaction processing systems - document financial activities Read MoreContemporary Issues in Management Accounting211377 Words   |  846 PagesContemporary Issues in Management Accounting This page intentionally left blank Contemporary Issues in Management Accounting Edited by ALNOOR BHIMANI 1 Great Clarendon Street, Oxford ox2 6dp Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne MexicoRead MoreWhy The Usa Is A Method Of Inventory Valuation1184 Words   |  5 Pagesmethods to value the inventory. The last in, first out (LIFO) method is one of the proper methods in inventory valuation method. For some reasons in IAS 2 Inventories it is not able to be used any more, but it is still accepted by the Financial Accounting Standards Board (FASB) in the United States of America. LIFO refers that the last importing item of inventory is sold by the first purchased inventory. To use this method will lead to some potential financial questions, especially in the period