The conventional wisdom is that “Global is Good”. Whatever makes it easier for trade and capital to cross borders brings prosperity to everyone. So it only makes sense that all financial statement preparation follows the same rules as well.
Then we can use those financial statements to do an apples to apples comparison of companies; we won’t have to do the math in our head to evaluate companies when one is in the U.S. and one is in France.
In the early days of the millennium, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) started a bold initiative to put this conventional wisdom into practice. In 2002, they set forth the Norwalk agreement, which had a goal to create common accounting standards globally, and was reaffirmed in a Memorandum of Understanding in 2006.
In the U.S., the SEC has the final say on what accounting standards we all use, and the pre-2010 SEC enthusiastically embraced a common accounting standard, with IFRS as that standard. In 2007, the SEC eliminated the requirement to reconcile IFRS to U.S. GAAP via Form 20-F for foreign companies listing on a U.S. exchange. In 2008, they proposed a mandatory conversion to IFRS by 2014, and in 2010 issued yet another proposal with a conversion deadline by 2015.
While the theoretical concept receives fairly strong support, the feasibility of a global standard in practice has many skeptics, with their numbers growing over the past seven years for two reasons. First, the FASB and IASB have largely failed to close the significant gaps between the two accounting standards, a necessary step towards a global standard. Second, IASB actions during the Global Financial Crisis have led to questions from the SEC about IASB independence and the perceived ease with which they modify their standards because of industry influence. These perceptions only reinforced earlier criticisms that delegating U.S. accounting standards to the IASB is a bad idea.
In general, the post-2010 sentiment at the SEC is that IFRS and U.S. GAAP, and the IASB and FASB, are fundamentally different and incompatible in practice.
Neither the FASB nor the IASB has issued a formal statement regarding their failed attempt to create a global standard, and all information on their web sites regarding convergence is dated 2013 or earlier. Despite the lack of a formal statement or recent update, in practice and for all intents and purposes, U.S. GAAP and IFRS convergence has been abandoned.
While incremental efforts to find common ground will continue, especially when creating new standards, in the foreseeable future, a single set of accounting standards around the globe will be good in theory but impossible in practice.