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Global Factors Slow Chances for Global Standards

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Global Factors Slow Chances for Global Standards

For the past several decades many of the world’s largest economies have been moving towards a global economy that requires a standard set of accounting standards. The European Union took a momentous step in 1999 by adopting the Euro as the standard currency for its 27 member states. It currently has the highest total gross domestic product (GDP) of any economy and is a member of the International Financial Reporting Standards (IFRS) which is viewed as the standard for the global economy. The United States has also become committed to integrating into a global set of standards, vowing to join the IFRS which already oversees 12,000 companies in 100 countries. Several of my classmates believe that the having a global standard will create a transparent economy that could lead to an increase in investor confidence. While this is true, there will be not a global set of accounting standards in the next five years due to reluctance of the United States to join the IFRS, China’s standards that are similar to the IFRS but still different, and the current global economic downturn.
One of the major obstacles to a global economy is the reluctance of the United States to join the IFRS. Behind the European Union the United States currently has the second largest GDP but as of 2013 is not part of the IFRS. Although the United States Securities and Exchange Commission (SEC) stated in a 2010 press release that, “a step toward achieving the goal of a single set of high-quality global accounting standards, the statement notes that the Commission continues to encourage the convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) in order to narrow the differences between the two sets of standards” they remain uncommitted to joining. In the middle of 2012 the

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