Globalization and its impact.

• Author: Livingston, Phil
• Position: President's Page

Looking out at downtown Hong Kong, the world seems much smaller than it did five years ago. The International Accounting Standards Board Advisory Council met here in mid-November, bringing together standard setters, accountants and financial officers from all over the world. Representatives from Russia, Japan and Africa were here. On the agenda were discussions about the IASB's various standard-setting projects on insurance contracts, performance reporting, revenue and stock option accounting.

The damage to the FASB's reputation and the overall state of financial reporting as a result of the Enron/WorldCom debacles have empowered the IASB. But there is substantive work to be done, and as Phil Ameen, General Electric Co.'s comptroller, recently told the Financial Times, "international accounting standards still need a lot of seasoning." U.S. GAAP benefits from long and significant investments in field use and corporate involvement in the standard setting process.

But, clearly, the IASB is the single worldwide standard setter of the future. Having that one arbiter makes complete sense for our global economy, especially for developing countries. Importantly, Robert Herz, the new chairman of the FASB, recently drove an agreement with the IASB to adopt a joint project on convergence of FASB and IASB accounting standards. This project will endeavor to select the best accounting standard in the body of existing international and U.S. GAAP in approximately 15 different areas, including pension accounting, income taxes and discontinued operations. This comes on top of the IASB's existing agenda, which includes proposals to eliminate the use of LIFO (last in, first out) accounting, expense...