1. Abstract
Financial reporting has experienced one of the biggest revolutions in history with the introduction of International Financial Reporting Standards (IFRS) in over 100 countries across the world. With the U.S. as on of the last big exceptions sticking to their own national GAAP, the IFRS are destined to be the lingua franca of the international accounting world. However, starting with the co-signed Norwalk Agreement in 2002, major efforts between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have cleared the way towards a convergence between both standards. This paper will throw a light on the process towards a global accounting standard by reviewing its most important steps, determine remaining obstacles, and lastly gives a critical foresight about long-term assets and drawbacks.
2. Introduction
Ten years ago, harmonization of worldwide accounting standards was considered an unachievable, yet worthwhile goal. Today, everyone speaks about “convergence” and it’s only a matter of time till the Securities and Exchange Commission (SEC) will allow, or even require, to report exclusively in IFRS on U.S. stock exchanges - a last barrier towards the victory of IFRS. What has happened?
In 2002, the FASB and the IASB joined forces, pledging to work towards a single set of high-quality global accounting standards by signing the Norwalk Agreement in their historical joint meeting, promising to make their existing financial reporting standards fully compatible as soon as practicable . In 2005, the SEC published a roadmap, containing a timetable to remove the reconciliation of foreign standards to U.S. GAAP on U.S. stock exchanges . In 2007, following a landmark proposal to eliminate the ...