The G20 and other major international organisations, as well as very many governments, business associations, investors and members of the worldwide accountancy profession, support the goal of a single set of high-quality global accounting standards.
Why is this the case?
The World Bank has been a long-term supporter of work to develop a single set of high-quality global accounting standards.
World Bank, 2017
[The FSB] reiterated its support for. a single set of high-quality global accounting standards.
FSB declaration, 2015
We support continuing work to achieve convergence to a single set of high-quality accounting standards.
G20 leaders' declaration, 2012
Modern economies rely on cross-border transactions and the free flow of international capital. More than a third of all financial transactions occur across borders, and that number is expected to grow.
Investors seek diversification and investment opportunities across the world, while companies raise capital, undertake transactions or have international operations and subsidiaries in multiple countries.
In the past, such cross-border activities were complicated by different countries maintaining their own sets of national accounting standards. This patchwork of accounting requirements often added cost, complexity and ultimately risk both to companies preparing financial statements and investors and others using those financial statements to make economic decisions.
Applying national accounting standards meant amounts reported in financial statements might be calculated on a different basis. Unpicking this complexity involved studying the minutiae of national accounting standards, because even a small difference in requirements could have a major impact on a company’s reported financial performance and financial position—for example, a company may recognise profits under one set of national accounting standards and losses under another.
IFRS Accounting Standards address this challenge by providing a high-quality, internationally recognised set of accounting standards that bring transparency, accountability and efficiency to financial markets around the world.
IFRS Accounting Standards bring transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.
IFRS Accounting Standards strengthen accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. Our Standards provide information that is needed to hold management to account. As a source of globally comparable information, IFRS Accounting Standards are also of vital importance to regulators around the world.
And IFRS Accounting Standards contribute to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. For businesses, the use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs.
Changing to IFRS Accounting Standards does not come without cost and effort. The companies reporting will generally need to change at least some of their systems and practices; investors and others using financial statements need to analyse how the information they are receiving has changed; and securities regulators and accounting professionals need to change their procedures.
But academic research and studies by adopting jurisdictions provides overwhelming evidence that the adoption of IFRS Accounting Standards has brought net benefits to capital markets.