You are required to research on globalisation and convergence of the IASB Conceptual framework and FASB...

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Accounting

You are required to research on globalisation and convergence ofthe IASB Conceptual framework and FASB GAAP. Provide at least 7literature review of articles that has explored in the same area.Word limit is 1500 - 2000 words.

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LITERATURE REVIEW ON THE GLOBALIZATION OF ACCOUNTINGSTANDARDS IFRS VERSUS US GAAP INTRODUCTION The movement of world economies and the expansion of corporate America overseas with dramaticfinancial results brought forward the need for a single set of global accounting standards that could be used for domestic and cross border financial reporting of foreign and US multinationalcompanies Advances in technology the Internet lower trade barriers NAFTA communication andtransportation systems have expanded the marketplace in which companies operate Multinationalcompanies have their home in the US but operate in other countries The trend toward US companiesearning more profits abroad is not new but it has accelerated in recent years and spread to many types of companies Many of these multinational companies are earning more than 50 of revenue from foreignsales reflecting the growing globalization of US business Examples of American companies that haveobtained 50 or more in revenues from foreign sales include Honeywell International Coca Cola PepsiCola and IBM Holstein 2007 Nearly 500 foreign companies are listed on the New York Stock Exchange while the London Exchange lists over 400 foreign companies Spiceland 2007 On November 15 2007 the Securities and Exchange Commission SEC exempted foreign firms fromincluding a reconciliation from International Financial Reporting Standards IFRS to US GenerallyAccepted Accounting Principles US GAAP when filing on US stock exchanges Foreign public firms arenow permitted to file using the International Financial Reporting Standards IFRS without reconciliationto US GAAP as previously required This move has created a mandate to converge IFRS and US GAAPand financial statement requirements SEC 2007 On June 18 2008 the SEC issued a press release stating that the worlds securities regulators are unitingto increase their oversight of international accounting standards The European Commission the Japan Financial Services Agency and the International Organization of Securities Commission IOSC are to beincluded in the International Accounting Standards Committee Foundation IASCF in an IASCFMonitoring Group SEC 2008 The threat of increased global power by the SEC has become one of thelargest sticking points in the convergence of US and international accounting standards This movementto include world regulators will aid in resolving world concerns about global control by the SEC and theUS in overseeing the globalization of accounting standards This paper examines the implications of the SEC decision to allow foreign companies to use IFRS infinancial reporting without reconciliation to US GAAP on investors multinational corporations andglobal financial reporting The decision of the SEC to unite world regulators on the convergence of globalaccounting standards is also reviewed The European Commission the Japan Financial Services Agencythe International Organization of Securities Commission IOSC is to be included in the InternationalAccounting Standards Committee Foundation IASCF in an IASCF Monitoring Group SEC 2008 Thedifferences between IFRS and US GAAP are compared A detailed list of countries that have adoptedIFRS is provided LITERATURE REVIEW The United States Government and business community have played a major role in shaping theaccounting profession from the standpoint of accounting standards The review of the literature citesevents that lay the foundation for justification for having global accounting standards Besides government and business technology has also played a role in shaping the future of theaccounting profession With the creation of technology and computer communication information could be recorded and transmitted quickly with remarkable accuracy Thus the World Wide Web in the1990s created the source of obtaining reliable international financial information The standard protocolof the Internet technologies allowed for a growth in global business The increase in global business ledto an increased focus on the growth of global transactions In 1999 the Bank on International SettlementsBIS revealed that the annual value of crossborder debt and equity transactions exceeded the value of thenational gross domestic products in many western economies including the US Canada as well asGermany and France The growing interest in foreign financing activity created a demand for accountingstandards that met the needs of investors and companies operating in global equity markets Bank onInternational Settlement 1999 In 2000 Gunther Gebhardt of the Brookings Institution wrote that marketdemand and market forces will achieve globally accepted accounting standards Gebhardt 2000 In 2002 following the US accounting scandals of Enron World Com and other US companies the USCongress legislated The Public Accounting Reform and Investor Protection Act of 2002 The SarbanesOxley Act This Congressional Act requirement referenced a previous act passed by Congress entitled The National Capital Markets Efficiency Act of 1996 In this act the US Congress directed the SEC torespond to the growing internationalization of the securities market by heavily supporting thedevelopment of high quality international accounting standards as soon as possible Congress 19962002 With the legislative response to the accounting scandals in the US the US Congress in the SarbanesOxley Act of 2002 has given direction to the SEC to move See Answer

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