
What does this mean for global corporations? What are the pros and cons of the convergence? In an article by EisnerAmper the costs and benefits are summarized:
"Several groups oppose the convergence, stating that inconsistent auditing and enforcement of international rules make it difficult to ensure credible financial statements. Significant hurdles still need to be overcome with respect to the convergence to one international set of accounting rules. Those hurdles include: time needed to convert existing records by CFO's and tax directors, anticipated corporate tax impacts, effect on the U.S. Uniform CPA Exam and adequacy of training for U.S. investors as well as U.S. audit firms...On the flip side, the notion of having one single set of standards worldwide is appealing...leading to investment comparisons on a worldwide basis as well as enable cross border transactions to be more transparent and reliable...and cut down the costs to which foreign companies investing in the U.S. markets will have to adhere."
In addition, the process of reconciling foreign investment and financial information to conform to U.S. GAAP has continually been a deterrent to foreign companies trying to raise money in the U.S. capital markets. While this debate exists, the convergence will be completed no matter what within the next two years. The impact of these changes will extend way beyond simple accounting issues. As one of the world's top public accounting firms, PwC has researched and analyzed the future effects for companies. On a section of their website, PwC gives their professional advice and recommendations regarding the upcoming convergence. A large amount of the new standards will have significant business and operational implications, causing companies to change their current practices. In return this will cost larger companies more time and money due to their size. PwC recommends companies to heavily research and understand the changes and their impacts on respective businesses and to develop a plan for implementation of each change.
The key takeaways for the common public are to understand that change is coming and the market could take a couple unexpected turns as companies adjust to the new accounting guidelines. There should be no public fear or freak out if the market temporarily reacts negatively to the convergence. Once the necessary adaptations are made, the uniformed set of accounting standards will be a great success for global business.