Global Accounting Rules Mapped Out

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Some large American companies may begin using international accounting standards, perhaps as soon as next year. The move comes after the Securities and Exchange Commission voted last week to propose a “road map” for the conversion to international accounting rules. The decision could require all American companies to be on board by 2016.

The SEC’s vote pushes the global business community toward a single set of standards, which could make it easier for investors to compare international companies and make it easier for firms to raise capital.

“Chairman Cox and the commissioners should be congratulated on this bold but appropriate move,” said Professor Trevor Harris, whose research focuses on U.S. and international accounting practices. “The move will be beneficial for investors and corporations as the IFRS are sufficient and of a high quality and we will be more aligned with the rest of the world.”

However, there are concerns about how easily American companies can learn the new rules and the how uniformly the rules will be applied.

“While there are some who will try to denigrate the move, research I did in the mid-1990s indicated for practical purposes the IAS was good enough even then,” said Harris. “This move was in many ways overdue.”

Photo credit: Mike Slichenmyer

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