Essay: Rising Need for Convergence of Accounting Standards

Sample Essay

There are several issues highlighted in the article which relate primarily to different set of accounting standards issued by different boards. The issues highlighted in the article include rising need of convergence in context of current economic conditions, practical application of different standards in a global economy, lag of time in implementation of new common standards promulgated after convergence, applicability of new standards in a biased environment, major problems in standards related to accounting treatment of loans, income tax and insurance contracts.

The first issue as highlighted in the article is the rising need of convergence in accounting standards. The convergence of accounting standards has been stressed for quite some time as cross border investments have become commonplace and organizations have grown tremendously with shareholders from around the world. It becomes quite difficult for companies to present information to stakeholders based on a set of standards from a single country. The ongoing global economic crisis and problems in interpretation of specific standards by various stakeholders in different parts of the world increases the need for a single set of accounting standards which are more practical and auditable.

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