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Aparat The conventional wisdom tells us that IFRS is inevitable, that the global nature of business demands it, that the rest of the world thinks the United States is dragging its heels and needs to commit to convergence now.

Then there are others who say, “Nonsense.”

In “Are Global Standards Bad for America?” author Jack Sweeney argues that losing the ability to set standards that work with our unique business environment — and, in turn, to deal with those who defy those standards — might outweigh any benefits of global convergence. Here's what Harvard professor David Hawkins told Sweeney:

“Having one standard-setter globally sounds very persuasive, but then you realize that the U.S. would be giving up a lot of influence over standard-setting. We need to think a bit more about this because there's no question that accounting standards influence behavior. If the U.S. government doesn't like certain behaviors being induced by accounting standards, it currently has a lot of power to deal with it, but once these other national governments realize that they have the same power, the whole approach may collapse.”

Fellow Harvard professor Karthik Ramanna took it a step further:

“The larger cost of IFRS is what we will be giving up in terms of the technology of standard-setting and having a set of standards that, frankly, work with our regulatory system — by that, I mean standards that work with how the SEC sees financial reporting, how investors see financial reporting. … One advantage of competing standard-setters is that these alternate accounting systems can coexist, and companies rather than regulators will have a choice of selecting into a particular accounting system — this allows innovation in performance measurement and innovation in control to happen.”

Interesting arguments, and ones I hadn't heard before reading Sweeney's article.

Here's the problem I have with them: The rest of the world is well on its way to IFRS convergence. Within the next few years, the number of countries that have adopted IFRS could reach 150. In an era when borders are dissolving and companies are increasingly doing business abroad, are we really prepared to stand against the rest of the globe in the way we prepare our financial statements?

What do you think? Is the move to IFRS inevitable, or should we continue to thoughtfully question the necessity of moving to a single set of global reporting standards?

While you're thinking about that, check out these related resources:

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