Every aspect of the business environment is subject to the prevailing modern trend—globalisation. Companies are organising themselves into global organisations, striving to serve markets around the world through streamlined, co-ordinated operations. Investors are looking at those companies in a global context—more willing to invest in foreign capital markets where the risk and reward equation provides an attractive incentive.
Regulation and standards are increasingly framed with a global perspective as well. International Financial Reporting Standards (IFRS) are currently used in 102 countries, with the International Accounting Standards Board anticipating this total to increase to 150 by 2011. One jurisdiction where change is now happening fast is the US. As the world’s largest capital market, new developments here will have widespread repercussions around the globe. If the US takes IFRS onboard, the relevance of IFRS and the momentum behind it will increase further.
This is good news, but the real goal should be something more ambitious still—corporate reporting that is easy to understand and straightforward to apply, and which conveys the fundamental reality of a company’s performance.
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