The Growing Importance Of International Accounting Standards

Arthur R. Wyatt the former chairman of the International Accounting Standards Committee, and responsible for work in several important projects regarding international accounting standards (IASC). The IASC is a committee that issues international accounting standards. The International Federation of Accountants (IFAC), are responsible for issuing auditing, ethical, educational, and public sector standards. The IFAC began out of the need to address broader professional issues than the IASC could handle.

Wyatts goal with the IASC is to reach the accounting firms used by multinational companies and their executives. Today, the standards issued by the IASC include most of those practices already implemented by those following the guidelines of the American Institute of CPAs Accounting. As a result of the alternatives offered in IASC statements, the issuance of international standards has had no effect on those practicing in the U.S. Other countries, however, use ISAC standards rather than incur the cost of maintaining a standard-setting body. This is thought to be the case because these countries eliminate the alternatives offered. A project in 1988 set out to eliminate many alternatives that make some U.S. practices unacceptable internationally.

Wyatt asserts that one of the major reasons for reducing the range of acceptable accounting alternatives is the increase in cross-border financing. The IASC wants to eliminate any confusion that could occur between countries. Bad lending decisions, high fees or increased interest rates could result as well due to the apparent differences. If the IASC successfully executes their project for improvements, other global countries will adopt international accounting standards needed for raising capital abroad.

What Wyatt gains from his experience with the IASC is a demonstration of diverse cultures agreeing on accounting matters and an environment created where practicing professionals recognize the responsibility each has to carry out the standards as they were intended. Wyatt believes the time is right for what the IASC is trying to do. As they come closer to whittled acceptable practices, U.S. CPAs must have a willingness to listen to the rationale the IASC intends in its changes. Wyatt believes that the IASC and accounting practitioners can make progress together.