Globalization and Accounting: From Convergence of Financial Reporting Frameworks to an All-Inclusive Model of Financial Accounting Theory

• In Event: International Accounting

Abstract

The debate surrounding globalization and financial reporting has focused on harmonization and quality of standards. Will universal standards ultimately result in comparability across countries? This paper reviews the literature regarding globalization and financial reporting in search of a solution to the complexity of global financial reporting. It concludes that harmonization of standards alone will not result in the desired comparability in financial reporting. Environmental differences may require different reporting needs and objectives. Culture and language differences are reflected in professional judgments and estimates. Diversity of environments, languages and cultures requires a more flexible solution to serve global users of financial information. Local differentiation of universal standards is necessary. Ultimately, financial accounting theory must be placed in an appropriate global framework responsive to user needs for disclosure based on differences in legal systems, financial markets and organizational structure, while recognizing the impact of culture and language on financial reporting practices.

Author

• Gerard Ras, Wayne State College