Accountants' Handbook Volume One: Financial Accounting and General Topics, Eleventh Edition

Chapter 9. GLOBAL ACCOUNTING AND AUDITING

Richard C. Jones, PhD, CPA

Hofstra University

INTRODUCTION

This chapter summarizes the key organizations and factors involved in the process of developing a global accounting and auditing structure. The discussion begins with an overview of the environment and goals of developing a global framework followed by a discussion of the key organizations involved in this difficult and challenging process.

(a) MOVEMENT TOWARD A GLOBAL SET OF STANDARDS.

Since the 1970s, the global financial environment has changed dramatically. Such changes are in part attributable to changes in the business and political climate in which companies operate. The key factors influencing the global business and political climate include increasing competition among companies operating in different countries, the emergence of additional market-based economies, and rapid improvements in information technology. At the same time, with the improvements in telecommunications and other technological innovations, the world's financial centers are increasingly interconnected, allowing corporations and borrowers to look beyond their home country's borders for capital. An increasing number of foreign companies routinely raise or borrow capital in U.S. financial markets,^[225] and U.S. investors have shown great interest in investing in foreign enterprises. This globalization of the securities markets has challenged securities regulators around the world to adapt to meet the needs of ...