The purpose of this paper is to perform a brief examination of International Financial Reporting Standards (IFRS) and the progress towards IFRS convergence in the accounting environments of China and the USA, providing useful information on the current status and future of IFRS convergence in these countries.
A range of IFRS-related literature from 1993 to 2013 was analyzed to provide the current status of IFRS and to determine the past, present and future of IFRS convergence in the country examinations.
IFRS convergence and adoption has occurred on a global scale due to the call for a single set of standards. China's most significant obstacles include training accounting professionals and becoming more involved in the International Accounting Standards Board (IASB) standard setting process. The USA's most significant obstacle is completing the Securities and Exchange Commission roadmap milestones, which will progressively move the accounting industry towards IFRS convergence.
These findings have been limited to an overview of IFRS convergence and adoption within China and the USA. Additional research opportunities exist by examining how successful countries have been in protecting individual economic interests by working with the IASB in the standard setting process for the IFRS, as opposed to being passive in the process. One economic indicator that should be examined is foreign direct investment, which has major impacts on country development and can be influenced by financial standards such as IFRS.
China and the USA both have milestones identified in this paper that will need to be reached before benefits may be reaped from the converging to IFRS.
These findings show that IFRS standards are being implemented globally in many nations, providing a common set of reporting tools to businesses and investors. Through these standards, China and the USA are working to be even more competitive forces in financial markets.
The author would like to thank Dr Shawn Carraher, Dr Rebecca Files and The University of Texas at Dallas Business Writing Center staff for their assistance and feedback while completing this paper.
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