Tuesday, August 12, 2008

Convergence: It's Coming

Dictionary.com defines convergence as an act or instance of converging. Very helpful.

Converging is defined by them as to tend to meet in a point or line; incline toward each other, as lines that are not parallel.

And that is what is going on with accounting standards.

The world keeps getting smaller and that is making it more difficult for investors to compare financial results from companies in different countries. As a result, their is a major push towards converging US accounting standards with international accounting standards. Adopting International Financial Reporting Standards ("IFRS") will represent a significant change for not just accountants like me, but the entire US economy. Nearly 100 countries currently require or allow the use of IFRS for financial reporting by publicly held companies. Canada will require IFRS by 2011, as will Japan. The US probably won't be far behind.

I'll try and write about this more in the coming months. In the meantime, there is plenty of information on a new AICPA sponsored website: http://www.ifrs.com/index.html

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