In 2002, the International Accounting Standards Board (IASB) created a new standard for financial reporting known as International Financial Reporting Standards. These new standards made an effort to unite accounting and financial information around the world. IFRS attempts to globalize the accounting and financial world by having a set of standards that allow investors in different countries to understand financial records and make an informed decision about whether or not to invest. With markets becoming more complex, facilitating the analysis of financial records is a must so that the market can have the most accurate price for stocks, bonds or any other financial investment.
Globalization is happening faster than ever, with the communication systems available. The market really never sleeps, companies have interests in other countries and have the means to know the current price of their investments. The IASB amends IFRS when it deems appropriate. The last amendment was announced on December 8, 2016 and will take effect for annual periods beginning on or after January 1, 2018. This allows companies or countries that use IFRS time to adapt to the changes. Although some countries have their own set of accounting standards, they will still use IFRS for investors in different countries because the financial reports will be in a readable format that international investors will understand.
The United States has its standards for financial information, the Generally Accepted Accounting Principles (GAAP), some companies will also use IFRS to show their reports and for their affiliated companies in other countries. This will help businesses save money by keeping a single set of books to record their transactions in only one way. Companies can now easily expand to other countries because they can learn IFRS methods and apply them to their current business. IFRS has many different standards for different categories such as accounting, financial statements, accounting and auditing standards.
Businesses today can easily grow and expand beyond the borders of their own country. Companies go to other countries, either to sell their products or services or to manufacture their products. Globalization helps spread ideas among companies, an employee in Europe could have an impact on an employee in America. Globalization is helping technology grow at the rate at which it is currently growing. With better technology, product production becomes more efficient, delivery times become more accurate, communication would be faster, and research and development would lead to new products faster. Globalization has impacted almost everyone on Earth and will continue to grow and expand the global economy for many years to come.
