Reading Financial Reports For Dummies, 4th Edition

Chapter 19

Creating a Global Financial Reporting Standard

IN THIS CHAPTER

Developing uniform global financial reporting standards

Seeing who benefits from standardization

Examining the differences between reporting systems

As more companies operate globally, the need grows for common financial reporting rules. Today, many global companies must prepare financial statements in every country in which they operate, to meet each country's reporting requirements. Approximately 120 nations and reporting jurisdictions permit or require International Financial Reporting Standards (IFRS) for domestic listed companies. The seven major holdouts are the U.S., China, Egypt, Bolivia, Guinea-Bissau, Macao, and Niger.

Companies that operate in the U.S. must keep a set of books according to U.S. generally accepted accounting principles (GAAP) (see Chapter 17), if the company is a U.S. company, and must meet the International Financial Reporting Standards (IFRS), or possibly other standards set by government officials in the country in which they're based.

Financial regulatory institutions plan to meld the standards at some point in the future, and major progress has been made. Today, more than 120 ...