The International Organization of Securities Commissions (IOSCO)is a group of top securities administrators from about 50countries. The Securities and Exchange Commission (SEC) is a memberof IOSCO. IOSCO is a primary supporter of the internationalizationof financial reporting standards through the InternationalAccounting Standards Board (IASB). At a recent meeting, adiscussion of the pros and cons of internationalizing financialreporting standards included the following arguments:
Pro:
Having the same accounting standards for external financialreporting for all securities markets will reduce misunderstandingsand create comparable information. For example, investors will beable to compare the financial reports of similar companies locatedin the United States with those located in China and decide wherebest to allocate their investments. One set of accounting standardswill also save corporations money because they will not needmultiple sets of books to track their international operations.
Con:
Requiring companies that list on all global securities exchangesto use the same external reporting requirements will misleadinvestors. For example, in countries where the majority ofinvestment funds come from banks in the form of long-termborrowing, debt to equity ratios will look very different thanthose of comparable U.S. firms. Accounting information must reflectits environment. Besides, as all business becomes global, reportingrequirements will naturally evolve to what investors demand.
Instructions
Write a one-page summary reflecting your opinion about the valueof harmonizing accounting standards for global equity markets.Support your opinions by referencing comparable cross-countrycompanies you have located on the Internet.
The International Organization of Securities Commissions (IOSCO)is a group of top securities administrators from about 50countries. The Securities and Exchange Commission (SEC) is a memberof IOSCO. IOSCO is a primary supporter of the internationalizationof financial reporting standards through the InternationalAccounting Standards Board (IASB). At a recent meeting, adiscussion of the pros and cons of internationalizing financialreporting standards included the following arguments:
Pro:
Having the same accounting standards for external financialreporting for all securities markets will reduce misunderstandingsand create comparable information. For example, investors will beable to compare the financial reports of similar companies locatedin the United States with those located in China and decide wherebest to allocate their investments. One set of accounting standardswill also save corporations money because they will not needmultiple sets of books to track their international operations.
Con:
Requiring companies that list on all global securities exchangesto use the same external reporting requirements will misleadinvestors. For example, in countries where the majority ofinvestment funds come from banks in the form of long-termborrowing, debt to equity ratios will look very different thanthose of comparable U.S. firms. Accounting information must reflectits environment. Besides, as all business becomes global, reportingrequirements will naturally evolve to what investors demand.
Instructions
Write a one-page summary reflecting your opinion about the valueof harmonizing accounting standards for global equity markets.Support your opinions by referencing comparable cross-countrycompanies you have located on the Internet.
