Convergence of Financial Accounting Standards

This assignment explores the ongoing global effort to harmonize financial accounting standards through IFRS adoption. It analyzes the benefits of convergence, such as enhanced investor understanding and reduced risk of errors, while acknowledging challenges posed by varying national regulations and cultural influences. The report highlights the progress made in adopting IFRS globally, particularly within the European Union, and concludes with a discussion on the ongoing complexities and future directions of international accounting standardization.

Advanced Financial
Reporting

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Conclusions......................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Globalisation refers to the free activities and movement under which people and
cooperation freely exchange the goods, capital, services, technology and information from one
country to another country (Abernathy, Beyer and Stefaniak, 2014). It is an action and
integration among the countries about the products, idea and other aspect of culture.
Globalisation of accounting standards are process which defines that how accounting standards
are work at the international level and how it applied in the international business in the world. In
addition to this various drivers towards globalisation of accounting standards, barriers toward
globalisation of accounting standards, progress, current status of IFRS as global accounting
standards and future of convergence project are also discussed in this report.
Main Body
The international financial reporting standards are that standards which is issued by the
IFRS. It provides a common global language for business affair so that organisation account are
understandable and comparable across international boundaries. IFRS are the set of accounting
standards which is developed by International Accounting Standards Board (IASB). Because of
global expansion of accounting standards, many countries who trade outside their geographical
area, it becomes easier for them to address the needs of the clients. Due to the global expansion
of Accounting standards, it attracts large number of international investors and clients. In the
1904, St Louis in the US in the international congress of accountants was an event that I
generally accepted as a beginning of initiatives directed to harmonization of accounting rules. In
a simple word it can be said that international accounting standard are a manifestation of
globalisation, with financial reports which is prepared under the IFRS presenting an image
consistent with that of multinational organisation and developed countries. By this international
financing reporting standards, many developing countries and emerging economies gain the
benefits (Armstrong, Guay and Weber, 2016). However, they also have to face the several
challenge related to adapting their regulatory infrastructure and culture to western oriented
accounting standards.
Harmonisation:
By fixing the limits of the degree of variation, company can bale to enhance the compatibility of
accounting practices is known as the harmonisation in the accounting. In a simple term it can be

said that it is a process of enhancing the compatibility of practices of accounting by et bound tpo
their degree of variation. Generally it can be aid that it aids in embraces a blending and gathering
the various components of accounting practices of different countries into the effective standards
and structure. It main objective is to develop the financial statement through which it comparable
with the financial statements of companies which are trading in different countries by following
relevant accounting principles.
Standardisation
GAAP are the set of guidelines and standards which have been developed by Financial
Accounting Standards Board (FASB) to ensure that all the financial statements are prepared as
per accounting principles and show true and fair view. In a simple word it can be said that
standardisation refers to the enforcement of rules which are more rigid and narrow.With
assistance of the standardisation, company can develop the fair and true principle and practice of
the financial accounting. This thing assist tin developing the highly efficient and fair
performance of the financial accounting in the business context. With assistance of this measure,
countries financial performance and financial statement if the organisation can able to improved
itself
Convergence:
Its main aim is to eliminate the differences in the accounting standards internationally.
There may be differences in policies and principles followed by different countries and to
eliminate this difference convergence concept plays a very important role. In a simple word it
van able said that at the international level, various countries follow the different policxie,
practices, standard of the finance and accounting (Chen and 2015). Therefore, convergence plays
a very crucial role to eliminate that differences among the various different practices and policies
of the accounting. This term has great importance in the international financial accounting
because many kinds of barriers in the international business can automatically decrease with the
help of this mentioned aspect.
Drivers towards globalisation of accounting standards:
For globalisation of accounting standards, there are several factors responsible for this
which includes, economic factors, environment, rules and regulations standards as well as
practices of accounting has moved accounting standards towards achieving a global aim. These
drivers design and run the globalisation at the international level. In the economic factor,

country's economic condition also responsible to set and affect the practices and principles of the
accounting standards. The rate of interest, inflation, recession all are affect the standard and
practices of financial accounting at the international level. On the other hand in the context of
rule and regulation is another driver which run and affect the performance of the financial
accounting standard at the international level. In this manner, government have developed some
kind of rules and regulations, policies and practices which have to follow the company which
deal in the financial accounting. Government require to maintain and measure that drivers of the
international financial accounting so as it can effectively gain the stability and effective
performance about the financial accounting.
Barriers towards globalisation of accounting standards:
Some of the barriers which includes issues in relation to culture, language, regulations
which are different in different countries. Sometimes it becomes difficult for the companies to
understand the complexity of international standards which in turn affects their financial
statements. In this manner, Culture is one of the major barriers in the context of the financial
accounting at the global level (Bhojraj, and CHO, 2015). Different countries have different
culture, languages and customs etc which creates the barrier in understanding the norm, principle
and practices of financial accounting in the different countries.
Future of the convergence report focuses on the positive development in the field of
financial accounting. Its main aim is to improve an ability of investor to compare their
investments on an international basis as well as helps to reduce risk of errors (Chen and Li
2015).With assistance of this convergence report, various risk and errors in the financial
accounting at the international level can easily reduce. In addition to this, in the different
countries there are different government has developed their own rules, regulation, code of
conduct and policies and taxation norm which have to follow each company in their financial
consideration.
Current status of IFRS:
IFRS is considered to be a regulatory framework for preparation of financial statements.
IFRS has been recognized as global accounting standards therefore it helps to reduce the
difference in financial statements. It has been adopted by more than 100 countries worldwide.
The international accounting standard board ha ben recognised as global accounting stanmdrds.
Many countries are expected to either adopt IFRS in entirely their own standards with standards

issued by the IASB. European union has been adopted the IFRS for the consolidated financial
statement of all organisation which is currently survived ion the united kingdom. As per the
research it has been founded that European union commission influence determination which is
defined the IFRS. With assistance of this IFRS many countries has highly benefited as their
financial statement ha improved and match according to the financial principles.
National legislation – It is to be noted that every nation is free to adopted the principles relates
to accounting standard because International accounting standard applied on the basis of
voluntary manner (Francis, Hasan and Wu, 2015). Therefore, there is no restrictive policy has
work for accepting rules and regulation. Hence, every countries can choose to account provision
as their conveyance or environment factor. So any of changes can be adopted before adopting
any rules and regulation with proper manner
Conclusions
Globalisation of accounting standards are process which defines that how accounting
standards are work at the international level and how it applied in the international business in
the world. From this report it ha been ascertained that The international financial reporting
standards are that standards which is issued by the IFRS. It provides a common global language
for business affair so that organisation account are understandable and comparable across
international boundaries. There are various drivers which run the norm and practices of financial
accounting at the international level. It ha been also concluded that at international level there are
some kinds of issues in relation to culture, language, regulations which are different in different
countries. Sometimes it becomes difficult for the companies to understand the complexity of
international standards which in turn affects their financial statements.

REFERENCES