Why are international financial reporting standards (IFRS) and the International Accounting Standards Board (IASB) so important for businesses and investors?
One thing is certain, accounting and GAAP regardless of what country you’re in can be complicated and confusing. This confusion is only compounded when you are dealing with different countries with different GAAP and filing rules. The International Accounting Standards Board (IASB) is attempting to standardize accounting reporting worldwide with their principle-based international financial reporting standards (IFRS).
Why is this so important? Well, it’s very important now because the country lines are fading now that many businesses operate in more than one country, and many businesses are now forced to think globally in regards to their products and services – so somewhat standardized reporting would make sense for many businesses.
Also, standardized reporting may be even more important for investors. Comparing companies that follow the same general reporting standards is difficult enough; when you throw in the varying standards that may come with global investing the comparisons can be even further complicated.
There are many other reasons, but even with these two basic reasons the need for international financial reporting standards are evident. With the IASB now working with FASB in the U.S. and other accounting standard-setters around the globe, standardized accounting (in some shape or form) may not be impossible.
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