World markets are becoming increasingly

intertwined. With the integration of capital

markets, the automatic linkage between the
location of the company and the location of
the capital market is loosening. As a result,
companies have expanded choices of where
to raise capital, either equity or debt. The
move toward adoption of global accounting
standards has and will continue to facilitate
this trend.
Financial statements and other means of financial
reporting.
Companies most frequently provide;
(1) the statement of financial position
(2) the income statement or statement of comprehensive
income
(3) the statement of cash flows
(4) the statement of changes in equity. Financial reporting
other than financial statements may take various forms.
Examples include the president's letter and supplementary
schedules in the company annual report, prospectuses,
reports filed with government agencies, news releases,
management's forecasts, and descriptions of a company's
social or environmental impact.
Efficient use of scarce resources.
Accounting provides reliable, relevant,
and timely information to managers,
investors, and creditors to allow
resource allocation to the most efficient
enterprises. Accounting also provides
measurements of efficiency
(profitability) and financial soundness.
High-quality standards.
A single, widely accepted set of high-quality
accounting standards is a necessity to ensure
adequate comparability. Investors are increasingly
making investing decisions across international
jurisdictions. As a result, investors need financial
information that is comparable across national
boundaries. But what are high-quality accounting
standards, how should they be developed, and
how should they be enforced is still a much
debated issue.
 The objective of general-purpose financial
reporting is to provide financial information about
the reporting entity that is useful to present and
potential equity investors, lenders, and other
creditors in making decisions about providing
resources to the entity. Information that is
decision-useful to investors may also be useful to
other users of financial reporting who are not
investors.
 The International Organization of Securities Commissions
(IOSCO) does not set accounting standards but is dedicated to
ensuring that the global markets can operate in an efficient and
effective manner. The International Accounting Standards Board
(IASB) is the leading international accounting standard-setting
organization. Its mission is to develop, in the public interest, a
single set of highquality and understandable International
Financial Reporting Standards (IFRS) for general-purpose financial
statements. Standards issued by the IASB have been adopted by
over 149 jurisdictions (similar to countries) worldwide, and all
publicly traded European companies must use IFRS.
IFRS is comprised of
(a) International Financial Reporting Standards
(b) International Accounting Standards
(c) interpretations issued by the IFRS
Interpretations Committee or the former
Standing Interpretations Committee (SIC). In
the absence of a standard or an interpretation,
other accounting literature, including that
contained in the Conceptual Framework for
Financial Reporting and recent pronouncements
of other standard-setting bodies that use a
similar conceptual framework, can be applied.
Challenges include
(1) IFRS in a political environment
(2) the expectations gap
(3) financial reporting issues related to key
performance measures widely used by management,
forward-looking information needed by investors and
creditors, sufficient information on a company's soft
assets (intangibles), and real-time financial
information, including fair values
(4) ethics in accounting
(5) international convergence