As a result of the Act, the FASB has invited comment on a proposal for a principle-
based approach to U.S. accounting standard setting. The proposal addresses concerns
about the increase in the level of detail and complexity in accounting standards.
The Sarbanes-Oxley Act permits the SEC to look to a private-sector accounting
standard setter, such as FASB, provided that the standard setter “considers, in adopt-
ing accounting principles,... the extent to which international convergence on high-
quality accounting standards is necessary or appropriate in the public interest and for
the protection of investors.”
(e) Convergence of IAS and U.S. GAAP. In October 2002, the FASB added to its
agenda a short-term international convergence project conducted jointly with the
IASB. The FASB also voted to authorize its staff to expand its research project on in-
ternational convergence. With respect to the short-term project, the FASB established
a goal of December 31, 2003, for issuance of a final Statement that would “eliminate
or reduce many, if not all, of the differences to be addressed in that project.”
Deloitte Touche Tohmatsu has published a detailed comparison of IASs and U.S.
GAAP that is available without charge on their IASPlus Web site at
http://www.iasplus.com/dttpubs/pubs.htm.
16.9 BENEFITS OF GLOBAL ACCOUNTING STANDARDS. Among the benefits
often cited for a single set of global accounting standards are:
- Easier access to foreign capital markets
- Credibility of domestic capital markets to foreign capital providers and poten-
tial foreign merger partners - Credibility to potential lenders of financial statements of companies from lesser-
developed countries - Lower cost of capital to companies
- Comparability of financial data across borders
- Greater transparency
- Greater understandability—a “common financial language”
- Companies need to keep only one set of books
- Reduced national standard-setting costs
- Ease of regulation of securities markets—regulatory acceptability of financial
information provided by market participants - Still can have local implementation guidance for local circumstances
- Standards are less susceptible to political pressures than national standards
- Portability of knowledge and education across national boundaries
- Consistent with the concept of a single global professional credential
In his testimony before the U.S. Senate Committee on Banking, Housing, and
Urban Affairs in February 2002, IASB Chairman Sir David Tweedie put the case for
a global accounting standard setter this way:
Why have an international standard setter?- First, there is a recognized and growing need for international accounting standards.
- Second, no individual standard setter has a monopoly on the best solutions to account-
ing problems.
16.9 BENEFITS OF GLOBAL ACCOUNTING STANDARDS 16 • 15