Article Review Summary

The article “Accounting in the Global Business Environment” by Bernard, Mary Ellen, Oliverio, Newman was published in CPA journal. The authors discuss different accounting organizations in the global business environment. The global accounting standards are driven by the optimistic global business leaders who are the Chief Executives of large corporations of different countries in the world. More and more companies are going global and sharing their knowledge and expertise around the world. This increases the importance of a single international association for synchronizing the financial transactions and accounting reporting standards.

There are different organizations related to international accounting. The main associations are briefly discussed. The International Federation of Accountants (IFAC) fulfills the purpose of creating a stronger and integrated profession of accountancy. The organization put efforts to gain increased acceptance and recognition of the standards for regulating the financial and capital market. The International Accounting Standards Committee (LASC) works to develop accounting principles that are used by business throughout the world for financial reporting. The International Organization of Securities Commissions (IOSCO) identifies the differences in financial accounting standards and reporting in different countries of the world. There are also different regional groups that represent the accounting and reporting standards for their specific regions like Africa or Europe.

The U.S. decision makers have been reluctant in completely accepting the international standards. The U.S. disclosure requirements are considered to be the most careful and accurate in the world. The U.S. system is fairly monitored regulation. There are many issues pertaining in the international accounting associations in the world. Some of those issues are briefly discussed in this article. In the United States, the accounting standards say that historical cost should be considered for recording transactions. On the other hand, the experts are debating for considering fair market value to record especially for financial instruments.

The international standard is to match the revenues received in the fiscal year to the expenses accrued to generate the earned revenues during the same period. This is the economic reality which means the actual happenings in the period. However, in Germany, there is a dissimilar definition of economic reality. Performance of one year is not a true representation of the actual achievements. It is also believed that the readiness for information disclosure depends on cultural characteristics of the country. If secrecy is common behavior than disclosing financial information will be reluctant. The U.S. culture is to fully disclose the relevant information.

There have been many successes in the world of accounting standards internationally. Some of the recent successes are shared in this article such as acceptance of international standards. According to the IFAC report, more than two thousand gloabal financial organizations and multinational corporations are preparing financial reports in accordance with International Accounting Standards. The International Auditing Practices Committee is focusing on the concerns related to the auditing standards. Some countries have already accepted the current International Auditing Standards as their national standards. , the New York Stock Exchange has been struggling for more flexible rules in relation to accounting ...