One Set of Accounting Standards

Establishing one set of accounting standards worldwide has been a topic of discussion for many years. Adapting one set of standards, one language, would increase the readability of the financial statements by all. It would create consistency along with quality reporting, and understanding of the financial statements by all countries. To date, the United States uses Generally Accepted Accounting Principles (GAAP) as its set of ethical values to guide behavior of its professionals. The use of International Financial Reporting Standards (IFRS) has been used internationally and is continuously being envisioned by many countries including the United States. The U.S. is under much pressure considering that other countries have already engaged into the convergence of the system. By 2014, the SEC planned to adapt IFRS globally however it was extended to 2015 for further consideration. Nevertheless, according to the article “Ethics, Professional Judgment, and Principles-based Decision Making Under IFRS,” this massive change would be expected to take effect by 2015 only if the SEC finds IFRS standards of “high quality and sufficiently comprehensive.” Although the SEC’s goal is to establish one set of accounting standards, one common language for all, the SEC must take into account what effect would this possible convergence result into. It is evident that this isn’t something that could be adapted within a short period of time. The SEC must assess the quality of reporting done under IFRS. To replace the current standards, GAAP, it is only reasonable to be assured that the new standards would only be of a benefit when formulating financial statements. The SEC’s extension of date to adapt the IFRS is based on assessing quality of financial reporting along with possible ethical dilemmas which might be encountered based on the different approaches followed under GAAP and IFRS. Under GAAP, financial statements should contain information relevant and present the...