Welch, Kyle T.
Global Influence of National Accounting Standards
Faculty Mentor: Kay Stice, School of Accounting and Information Systems
The project objective is to observe the international accounting standards community responses
to the recent Enron and Anderson collapse.
Throughout time, various generations have been characterized by influential business
philosophies and inventions. From a McDonalds in Moscow to the Coke machine in Zimbabwe,
globalization of businesses has become one of the key attributes of this generation. Companies
are finding that tapping into untouched foreign markets is a key element to success.
The globalization of financial markets has stimulated investors to consider investing in
companies that are lo cated in other nations than their country of residence. Traditionally, such
movements were complicated by international accounting diversity—hence, the increasing
importance of an internationally accepted accounting framework.
Paul Volcker, an internatio nal accounting professional explained that "obtaining a strong global
consensus on a single set of accounting standards will be very difficult.” He explained the
difficulties come from, “the technical challenges facing the profession…different traditions…
approaches…and degrees of professional development." Thus almost every country has its own
rules for accounting standards.
There have been several significant changes in the realm of accounting standards over the past
year (2003). The approach taken to this project was to find out how the American Financial
Accounting Standards Board (FASB) was affecting the world’s view of accounting standards.
A year ago this prospective seemed to be reasonable viewing historical information that
demonstrated accounting standards in the US as being the most strict and technical. American
accountants are almost proud of how strict and representative the standards are. However over
the course of the year with additional research, it has become evident that the tides are changing
There is additional value in accounting standards beyond the quality of presentation and might
lean towards comparability. Indeed it seems the opposite is true as the International accounting
Standards Committee (IASC) is gaining significant acceptance. It appears that the international
market is gaining influence over the FASB.
With the pressures of globalization and strengthening international market forces—the United
States is not the only power house for investor influence. The market is continuing to push for
convergence of international standards. Through the research performed it appears that
International Accounting Standards (IAS) are increasingly looked to for comparability over the
FASB’s Financial Accounting Statements (FAS) statements; at least with accounting principles.
Typically the IAS has taken an accounting principles based approach to setting standards. This
provides some flexibility and is not nearly as extensive as FAS statements. Typically country
might adopt IAS and have a home based bored that is given the responsibility to interpret the
board statements to more specific requirements. The IAS appears to becoming the authority and
the ruler to be measured by. Mexican GAAP is the typical model beginning to be seen
throughout the world for establishing GAAP.
The Mexican Institute of Public Accountants (IMCP) has the responsibility to build Mexican
GAAP. Currently, the standards issued by the IMCP are prepared in accordance with Mexican
standards, approximately 70% of which are already in line with international standards. 1
Mexico is trying to get on the road towards international uniformity through the IAS. Though
the Mexican standards are not yet aligned with the International Accounting Standards, Mexican
CPA’s are instructed to apply IAS as supplementary. 2 In fact The IMCP is a member of the
Standards Advisory Council.
In order for Mexico to successfully adopt and apply the International Accounting Standards, and
as part of the strategy to achieve convergence, on 25 April 2001 the IMCP and other institutions
launched an initiative to form the Mexican Council for Research and Development of Financial
Reporting Standards (CINIF), which will be responsible for issuing financial reporting
accounting standards that are in line with International Accounting Standards (IAS). CINIF
members have resolved to continue with the strategy of making the accounting standards that
govern Mexico’s economic activities in the future fully consistent with IAS.
The pattern followed by Mexico is similar to most of the emerging markets wanting to
experience growth. In the past the FASB has been the trend setter and the standard for
international reporting; it appears now that the IASC has taken over that responsibility and is
now the leader in effecting international standards.
Arturo G. Lara, Mexicano CPA–ITMS
Bulletin A-8 IMCP