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How do they assess the future of global accounting standard convergence?

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Go to the International Accounting Standards Board’s website (www.ifrs.org).

  • How do they assess the future of global accounting standard convergence?
  • Has Japan adopted IFRS?
  • Do you believe countries will adopt a uniform IFRS GAAP or continue to have country by country unique “carve-out” accounting principles? Why, or why not?
  • Is there a downside if countries do not adopt a uniform IFRS?

Reference

The IFRS Foundation and the IASB. (n.d.). http://www.ifrs.org

Do the discussion first then response each posted below

Posted 1

How do they assess the future of global accounting standard convergence?

Because of the advances around the world globalization, modern economies have been relying in international transactions and earlier many nations had their own form of national accounting standards. This made it very difficult to process out transactions as there was no proper, consistent and uniformity in standards around the world. The IFRS is providing uniformity by applying rules of accounting aiming it to utilize a worldwide framework for accounting. The convergence of global accounting is not an easy task as nations around the world would need to adopt its accounting principles to be successful. The IFRS is promoting accountability, transparency, and efficiency to global accounting standards.

Has Japan adopted IFRS?

Yes, in 2010 Japan voluntarily adopted IFRS. Japan’s goal is aimed at achieving global accounting standards which are high-quality. Japan adopted IFRS without removing its own accounting standards. Japan is committed to convergence of Japanese GAAP with IFRS. IFRS is not permitted for use in statutory separate financial statements but countries can use in case of consolidated financial statements of certain qualified listed companies. “Both Japan and the US implement GAAP but have adopted IFRS as a bylaw principle. This is a set of detailed rules regarding accounting standards, interpretation guidelines, practical guidelines and more. However, the rules are roughly sketched compared to J-GAAP. Many notes need to be taken with efficient substantiation for a sufficient interpretation of details per company and country. Unlike J-GAAP, IFRS includes non-operating income as ‘other operating income’ and ‘other operating expenses.” (Global Connect, 2021)

Do you believe countries will adopt a uniform IFRS GAAP or continue to have country by country unique “carve-out” accounting principles? Why, or why not?

I believe a unified worldwide accounting standards would better to understand, follow, and have consistency. Below are some of the reasons why adopting a uniform IRFS GAAP would be beneficial:

Provides a single set of standards of accounting would provide transparency, accountability as well as transparency

I think for all business this is greatly beneficial to reduce the effort, time, and expense of preparing multiple reports, as a single system of preparing reports would be implemented throughout world. The international accounting transactions would be made easier with fewer costs.

If a centralized system is in place, it would provide a unified authoritative body with the task of compliance.

Global business expansion opportunities will improve as companies will have the confidence to operate in foreign nations.

It would provide a balance as this provides flexibility as these are principles-based and all the goals are aimed at achieving reasonable valuation.

Is there a downside if countries do not adopt a uniform IFRS?

Yes, there is a downside if countries do not adopt a universal uniform IFRS. The examples of this lack of universal standards we see it all over the world. Many businesses have a difficult time to expand their business across the world but because of the costs involved it is not a simple task. There are many variables why other nations do not have a standard system whether to control their imports and exports, financial economy or even their markets. The variables maybe too much for other countries or nations to conform to one unified standard and it does many issues starting from small business to the larger organizations. If countries do not adopt or have a uniform IFRS the system is no different than today. My answers to question three above would be reversed. I think it would be simpler for those who have a unified system to do business with as the system is understood.” Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports” (IFRS, n.d)

Posted 2

Go to the International Accounting Standards Board’s website (www.ifrs.org).

  1. How do they assess the future of global accounting standard convergence?

“Our Standards are developed by our two standard-setting boards, the International Accounting Standards Board (IASB) and the newly created International Sustainability Standards Board (ISSB). The IASB sets IFRS Accounting Standards and the ISSB sets IFRS Sustainability Standards Board (ISSB). The IASB sets IFRS Accounting Standards and the ISSB sets IFRS Sustainability Disclosure Standards. The G20 and other major international organizations, as well as very many governments, busines associations, investors and members of the worldwide accountancy profession, support the goal of a single set of highest quality, global accounting standards” (IFRS, 2022, pp3).

  1. Has Japan adopted IFRS?

Under the agreement between the ASBJ and the IASB agreed upon in 2007, the ASBJ has been working towards converging all requirements of IFRS’s. The merger under the agreement were announced in June 2011 by the ASBJ and IASB. “While Japan has considered the possible mandatory adoption of IFRS by public companies for some time, a decision to that effect is yet to be made. Currently, Japan is promoting greater use of IFRSs on a basis of voluntary adoption as explained above” (Deloitte, 2011, pp4)

  1. Do you believe countries will adopt a uniform IFRS GAAP or continue to have country by country unique “carve-out” accounting principles? Why, or why not?

Today many companies have abandoned their local accounting standards in favor of IFRS, in fact, at least 110 countries all over the world use this system in one form or another. While I believe that a uniform IFRS and GAAP should be used by countries all over the world, I feel that the complete uniform approach may be difficult according to different countries laws, languages, and interpretation of this system. This system cannot be truly used as a uniform system all over the world until every country adapts the system into their business way of life.

  1. Is there a downside if countries do not adopt a uniform IFRS?

Since the IFRS has not truly been tested in any other country than the U.S., the true magnitude of applying this system to such a large overall economy is very unknown. “According to the SEC, it will cost .12% of revenues to implement the standards nationwide, which means the cost can be as high as several billion dollars. The cost to achieve the additional comparability is not worth several billion dollars. From a cost-benefit perspective, convergence is superior to adoption. Transiting to IFRS itself can present many challenges and problems along the way” (Pros and Cons, 2021, pp3).

Posted 3

How do they assess the future of global accounting standard convergence?

The IASB is the IFRS Foundation’s independent standard-setting body, which is responsible for the IFRS Accounting Standards, which are used in more than 140 countries. The IASB and the FASB collaborated in the early 2000s to bring our separate literatures closer together by developing combined standards and making collaborative decisions. Until 2011, this component of convergence was the emphasis, and it resulted in requirements that were almost similar. Our Standards on business combinations, as well as our literature on segment reporting, consolidation, revenue recognition, and leasing, are examples of such initiatives. Since its creation, the FASB has been an active participant of our Accounting Standards Advisory Forum; we have held successful annual joint education sessions; and we have frequent board and staff meetings (Barckow, 2021).

Has Japan adopted IFRS?

For domestic public corporations in Japan, the International Financial Reporting Standards (IFRS) are permissible but not mandated. The International Financial Reporting Standards (IFRS) are one of four recognized financial reporting frameworks. Japanese GAAP, Japan’s Modified International Standards (JMIS), and US GAAP are the others (IFRS, 2021).

Do you believe countries will adopt a uniform IFRS GAAP or continue to have country by country unique “carve-out” accounting principles?

I believe countries will continue to have “carve-out” accounting principles. The most significant distinction between US GAAP and IFRS is that IFRS gives far less overall information. Its revenue recognition advice, for example, is far less comprehensive than GAAP, and it provides very few industry-specific instructions. Because companies may not have a market motive to generate IFRS financial statements, US issuers without large clients or activities outside the US may fight IFRS. Other U.S. issuers may be forced to follow U.S. GAAP since it is necessary for filings with other regulators and authorities, resulting in higher expenses than if they followed exclusively U.S. GAAP.

Is there a downside if countries do not adopt a uniform IFRS?

The consequences of not reconciling GAAP and IFRS is significant. In many circumstances, analyzing investment targets, acquisitions, or rivals will involve a comparison of financial statements prepared under two different accounting regimes. The use of the International Financial Reporting Standards (IFRS) varies greatly from one nation to the next. Each one has its own system of regulatory standards, and compliance and enforcement are often lax in many nations (particularly in the fastest-growing emerging nations). The accounting profession’s quality and independence are also frequently spotty.

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