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There are different accounting standards around the world because different countries have different legal traditions and different cultures and approach economics and financing differently. That said, there is more standardization among countries than the question implies. In fact, the nongovernmental International Accounting Standards Board, established by the International Financial Reporting Standards Foundation (IFRS), which acts as a governing body for the accounting industry in many countries and the membership of which reflects a great deal of political, geographical, and cultural diversity. The IFRS website, the link to which is provided below, describes this organization’s missions as follows:
The IFRS Foundation is an independent, not-for-profit organisation working in the public interest. Our primary mission is to develop a single set of high quality, understandable, enforceable and globally accepted International Financial Reporting Standards (IFRS) based upon clearly articulated principles.
IFRS are developed by the International Accounting Standards Board (IASB), the independent standard-setting body of the IFRS Foundation.
While membership in the foundation and adherence to its principles is voluntary, it has been fairly successful at standardizing accounting practices on a global basis. The biggest challenge the Board has faced in the recent past was a product of the enormous 2001 accounting scandal that roiled the industry in the United States and resulted in the reputational destruction of one of the country’s largest and previously most respected accounting firms, Arthur Andersen. The legislation drafted by Congress and ultimately signed into law, the Public Company Accounting Reform and Investor Protection Act (Public Law 107-204, also known as “the Sarbanes-Oxley Act”), imposed new regulations on the accounting industry that had international ramifications and forced other countries’ accounting industries to adapt to these changes in U.S. law. That said, there remains, as noted above, considerably more standardization, especially among larger, more developed countries, in the accounting world than some might think.
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