History and Critical Assessment Assignment

History and Critical
assessment of global
convergence of accounting
standards

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. History of global convergence of accounting standards.....................................................1
2. Critical analysis of the extent to which global convergence of accounting standards have
the goals..................................................................................................................................2
3. Difficulty of agreement on global convergence.................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Accounting standards are essentially in financial world. It regulates various countries
accounting framework. The enclosed report deals with the history and critical assessment of
global convergence of IAS accounting standards. IAS has been the main body which guides and
regulates accounting world by underlying various standards which provide support to
accountants in making out their financial work in effective way. Global convergence helps to
mergers and acquisitions. Accounting standards improves quality of accounting world through its
important regulations (Oulasvirta, 2014). The global convergence initiates transparency and
better comparability which is required in financial reporting in the best possible way. It also
results into greater transparency about organisation to external parties as well. It is much
important as it helps country to be effective in its working and functioning in accounting world
with much ease. It guides about financial reporting in effectual manner.
1. History of global convergence of accounting standards
Several bodies are actively engaged in achieving the objectives of global convergence of
accounting standards. Rapid growth of industrialisation as well as international trade has given
rise to making effective financial environment largely. It is important as it provides industries an
effective way to support in financing related work.
The history of global convergence dates back to 1973. The establishment of accounting
body IASC (International Accounting Standards Committee), that was previously known as IAS
(International Accounting Standards) was formed on 29 June 1973. It was accepted by 16
countries when they all signed the constitution for its effective formation. It came to force so that
it can be widely accepted in financial world (Zhang and Andrew, 2014). Its headquarter is
located in London. Its main aim is to regulate and implement accounting standards which are
globally accepted.
The global convergence was widely accepted by various countries. IAS standards have
gained convergence. Countries which were using rule based system and also using principle
based system have applied IAS standards. Apart from this, countries having different cultures
had also accepted accounting standards governed by IAS. The global acceptance mainly rely on
principle based as well as several notions of flexibility. The implementation of IAS has laid
1