Examining the Convergence of GAAP With International Standards

Historically, for centuries Western economies have operated by a select few in power and wealth making political and business decisions in secret that affect the masses; even if those millions are unaware of these deals. As the world’s economies globalize and modernize, with information becoming instantaneous, the common notion becomes one of knowing what leaders in politics and business are doing to affect the world’s economies.

In order to maintain a free and honest ECONOMY, the development and enforcement of accounting principles and regulations internationally is imperative 偵探社. Traditionally, American Generally Accepted Accounting Principles (GAAP) have held stringent regulations on businesses’ reporting and disclosure of their financial transactions(2); translating to large penalties and litigation for any company who violates these principles.

The corruption of government and business officials is “how business in Europe is done” (1). A landmark case of which spurred changes in IFRS was one with a British company whom made corrupt business deals with Saudi Arabian royalty. In the mid 1980’s, Saudi princes brokered an arms deal with the united states, Britain and Saudi Arabia and the arms manufacturer British Aerospace (BAE).

Essentially the terms of the deal left BAE with government weapons contracts in the three countries involved in the deal, while the company paid almost the equivalent of 1. 5 billion dollars in cash, vacations, cars and shopping sprees to the family and friends of the Saudi princes who brokered the exchange. The money for this company spending came from a “slush fund”(1); money kept off of financial records so that most people examining them could not detect the fraud. For over thirteen years this fund paid out to these princes as BAE received renewed government contracts.

Since scandals like BAE have come to international attention in recent years, the need for greater business regulation beyond borders has come to the most attention it has ever had. The international community has been examining use of accounting standards to combat business practices once held by BAE, Halliburton and Siemens as opposed to attempting to make countries enact laws or forming regulatory agencies.

The International Accounting Standards Committee is an international board of accounting specialists who are working towards an international standard for accounting. Having such standards in place would allow a capital and business exchanges to occur more freely and help prevent fraud and corruption from happening.

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