Synopsis

Throughout most of the twentieth century, financial statements prepared in different countries could look strikingly different from each other. Because of the costs and confusion caused by variations in national accounting standards, professional accounting societies from North America, Europe, and Asia joined forces to develop a single set of International Financial Reporting Standards (IFRS). Similar efforts were made to create uniform international auditing standards. As of 2018, the United States is the only major industrialized nation that neither permits its domestic companies to prepare financial statements using IFRS nor is working to fully converge its domestic accounting standards with the international standards.

Discussion Questions

1. What factors contributed to diversity among national accounting standards?
2. Describe the negative consequences of inconsistencies among national accounting standards.
3. Why has the United States been reluctant to adopt IFRS?
4. What factors in the 2000s made non-U.S. companies reluctant to list their shares on the NYSE and Nasdaq?

Additional Sources

Report on U.S. Portfolio Holding of Foreign Securities A U.S. Treasury Dept. report on foreign securities held by U.S. investors as of December 31, 2016.