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The world has been flirting with the notion of convergence of accounting standards for as long as seven decades now. The first time the issue arose was in the aftermath of World War II, in the later 1950s. It was inspired by an apparent desire for global economic integration, with particular focus on facilitating cross-border flow of capital.

But to date, even with the establishment of the International Accounting Standards Board (IASB) and the International Financial Reporting Standards (IFRS), among other toward-global accounting structures, the ‘true’ global accounting standards is still not in sight. There still seems to be a lack of agreement on what global accounting standards should look like. Must countries give up on local accounting standards and subscribe to international standards exclusively?

This is evident in how focus keeps changing from one concept of such a global structure to another. So far, three concepts have been explored: harmonization; convergence; and comparability.

Below is a look at these concepts and perhaps as evidence that a ‘truly’ globally-accepted accounting structure may not be in sight yet:


When the notion of global accounting standards was first discussed, focus was on harmonization. In this respect, the idea was to reduce differences among the world’s major capital markets’ accounting principles. In other words, major capital markets were still expected to have their own accounting standards. However, there would be effort to make sure that one country’s standards were as similar to other standards as possible.

Too bad this seems to have failed. The fact that different countries struggled with different market, legal and political circumstances was a major hindrance. But over time, it seemed that the globalized marketplace could not permit countries to have the independent freedom of deciding when and how to be like others. Simply, harmonization could not be possible because it left choices exclusively in the hands of individual countries. And in the end many countries were not trying hard enough, not without a body that would push hard for it.


By the early 1990s, there had been decades of discussion over a new concept that would replace harmonization, and which had been in the process of being developed and refined. This new concept, therefore, came to being in that decade: convergence.

The basic premise of convergence was the development of a unified set of international accounting standards that were to be used globally. The two main bodies that led the way towards convergence were the Financial Accounting Standards Board (FASB) and IASB. Indeed, in 2002, the two institutions came to agreement to develop one set of high-quality, international accounting standards. The goal of such agreement was to reconcile the individual differences between capital market accounting standards and as such improve consistency between financial statements globally. The United States’ Generally Accepted Accounting Principles (GAAP) was particularly a target.

However, again like harmonization, albeit for different reasons, convergence proved difficult. It became hard for standard setters to agree on what was best for stakeholders. As a result, the process of approving standards became longer than expected. Finally, the board focused on four areas: revenue recognition; financial instruments; insurance; and leases. And in the end, revenue recognition was the one area that proved a success. Nonetheless, convergence did not succeed, the ‘one-size-fits-all’ tactic being impractical, and thereby giving way to a new concept.


Comparability is the reigning concept of international accounting standards. This began with the FASB creating an informal and collaborative network of accounting bodies in the world’s major capital markets. The main aim of this network, FASB announced, would be comparability.

Like harmonization, this concept focuses on individual countries as a starting point – different from convergence which started from the ‘global’ and tried to impose that on individual countries. Particularly, comparability would look to establish global accounting standards but only by taking into consideration various countries’ local culture as well as legal and political differences. To achieve this, FASB has since turned their attention to a three-part strategy: development of high quality GAAP standards; participating actively in the development of IFRSs; and the enhancement of relationships and communications between and with other national standards setters.

However, it is doubtful that this concept may be successful either. Besides, the main focus of FASB still remains the establishment of accounting standards that can be recognized as global, which implies a certain degree of uniformity. But this is an impossible paradox: by virtue of different cultures, as well as legal and political circumstances between countries, it is highly unlikely that standards setters may agree on the same things. They may agree on some, but not likely on most.

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