Michael Sharpe then deputy chairman of the International

Accounting Standards #1784

Michael Sharpe, then deputy chairman of the International Accounting Standards Committee,
made the following comments before the Financial Executives International 63rd Annual
Conference:There is an irreversible movement toward the harmonization of financial reporting
throughout the world. The international capital markets require an end to:1. The confusion
caused by international companies announcing different results depending on the set of
accounting standards applied. Recent announcements by Daimler-Benz (nowDaimlerChrysler)
highlight the confusion that this causes.2. Companies in some countries obtaining unfair
commercial advantages from the use of particular national accounting standards.3. The
complications in negotiating commercial arrangements for international joint ventures caused by
different accounting requirements.4. The inefficiency of international companies having to
understand and use myriad accounting standards depending on the countries in which they
operate and the countries in which they raise capital and debt. Executive talent is wasted on
keeping up to date with numerous sets of accounting standards and the never-ending changes
to them.5. The inefficiency of investment managers, bankers, and financial analysts as they
seek to compare financial reporting drawn up in accordance with different sets of accounting
standards.6. Failure of many stock exchanges and regulators to require companies subject to
their jurisdiction to provide comparable, comprehensive, and transparent financial reporting
frameworks giving international comparability.7. Difficulty for developing countries and countries
entering the free market economy, such as China and Russia, in accessing foreign capital
markets because of the complexity of and differences between national standards.8. The
restriction on the mobility of financial service providers across the world as a result of different
accounting standards.Clearly, eliminating these inefficiencies by having comparable high-quality
financial reporting used across the world would benefit international
businesses.InstructionsResearch the issue using the Internet and answer the following
questions:(a) What is the International Accounting Standards Board and what is its relationship
with the International Accounting Standards Committee?(b) Which stakeholders might benefit
from the use of international accounting standards?(c) What do you believe are some of the
major obstacles to harmonization?View Solution:
Michael Sharpe then deputy chairman of the International Accounting Standards

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