Accounting for Differences.

• Author: L. Bukics, Rose Marie

If international accounting standards are here to stay, what do they mean?

True or false: Because you're involved with a U.S. corporation, international accounting standards (IAS), as promulgated by the International Accounting Standards Committee (IASC), have no impact on your current work environment.

True or false: U.S. GAAP is the only acceptable accounting standard used in the global marketplace.

True or false: No corporation in the United States prepares financial statements using IAS standards.

True or false: Companies aren't permitted to use international accounting standards when listing on the London, Zurich, Frankfurt or Hong Kong stock exchanges.

If you answered true to any of these questions, read this article and its sidebar carefully. While it isn't an exhaustive explanation of financial reporting under IAS, it highlights the differences that may affect a financial executive's information needs. Be aware of these differences and their potential impact on the comparability and reliability of financial information published in the global marketplace.

Heads Up

Although some financial executives may feel removed from the international markets, in reality all businesses operate in the global marketplace. Whether your firm is a multinational corporation or you're the CFO of a small business looking to expand internationally, you must be aware of recent changes in the international accounting arena. International accounting standards have made significant inroads, and the growing influence of the IASC is a serious consideration. You need to recognize that international accounting standards represent an alternative approach acceptable in many countries and on many stock exchanges. They're here to stay.

Consider the following events that have occurred within the past four years:

* The European Union (EU) has concluded that IAS are the preferred option for the future development of accounting in EU countries.

* The finance ministers and central bank governors of the G7 countries recently expressed support for IAS as a means to attaining greater transparency and openness in the world financial markets.

* The World Trade Organization has announced its support for the work of the IASC.

* The International Organization of Securities tries and accepted by 39 of the world's stock exchanges. Though some of the companies and countries are small, some large multinationals also use IASC standards. For example, Nestle, Bayer, Renault, Saint...