Should U.S. standards line up with the rest of the world?
In matters of accounting and auditing, the United States increasingly is going it alone as the rest of the world settles on a different set of standards. U.S. companies must conform to the detailed rules known as Generally Accepted Accounting Principles (GAAP). Elsewhere, companies largely follow what are known as the International Financial Reporting Standards (IFRS), which rely on broad guidelines rather than the rules-oriented GAAP approach. In recent years, U.S. and international oversight bodies have discussed convergence of these different systems, but they remain far apart on almost all matters. Advocates for standards that will make financial statements as clear as possible for investors acknowledge that the United States may have the right answers in some areas, even as it resists investor-friendly rules elsewhere. But that raises questions about whether investors will best be served if the United States eventually has the only distinct set of accounting rules in the developed world, especially as business grows increasingly global. Among the questions under debate: Is U.S. GAAP, with its rules and regulations, better than IFRS? If the U.S. doesn't use IFRS, will its public companies have trouble attracting foreign investors? Will investors be better served if the United States adopts more rigorous auditors' reports used elsewhere?
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Reports, Studies and Original Documents
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The Next Step
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Morgenson, Gretchen, “Earnings Misstatements Come in Bunches, Study Says,” The New York Times, Oct. 23, 2015, http://tinyurl.com/
Chasan, Emily, “FASB Proposes Changes to ‘Materiality,’” The Wall Street Journal, Sept. 24, 2015, http://tinyurl.com/
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McKenna, Francine, “Investor advocates protest proposals limiting disclosure,” MarketWatch, Oct. 19, 2015, http://tinyurl.com/
American Institute of CPAs
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World's largest member association representing the accounting profession, with more than 412,000 members in 144 countries.
Financial Accounting Standards Board (FASB)
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Private-sector accounting standards-setter for U.S. for-profit companies.
Financial Executives International
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Trade group for chief financial officers and other high-level financial executives.
International Accounting Standards Board (IASB)
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Global group that develops International Financial Reporting Standards (IFRS) and is backed by the IFRS Foundation.
Public Company Accounting Oversight Board (PCAOB)
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Private nonprofit corporation established by Congress to oversee the audits of public companies and investment dealers.
U.S. Securities and Exchange Commission
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Federal regulator of financial markets and the final arbiter on accounting rules.