Abstract:
Inspired by globalization, the rapid harmonization of accounting methods into a common set of international standards is tremendously interesting to investors seeking greater portfolio diversification and investment comparability as well as national standard setting regulators. The controversial decision for Canada and other nations to adopt International Financial Reporting Standards (IFRS) has many pondering the future role of established national regulators. National regulators in many nations, including Canada, develop and prescribe their own version of Generally Accepted Accounting Standards (GAAP) which guide financial reporting in their respective jurisdictions. With IFRS adoption pending in 2011, conversion challenges local standard setters to identify new and residual functions. Research suggests that there are many roles for these national bodies to play both in their local jurisdictions and the international arena. Adoption of IFRS will primarily apply to publicly accountable organizations only. This leaves local GAAP regulations, whether modified or intact, relevant for nonpublicly accountable and non-profit organizations in each jurisdiction. In addition, new roles for national regulators are actually emerging as a result of the international transition. Such roles include strategic planning and priority setting. Technical and local perspectives, assistance with promotion, communication, implementation, and interpretation of the regulations will also be influenced by participation of national standard setters. In addition, new roles including research, performance measurement, modification, and training will emerge onto the agendas of national standard setters. The investigation concludes that the role of participating regulators is poised for growth through promotion of their national perspectives into the emerging international regulatory environment. Contrary to conventional concern, the harmonization of accounting methods into a common set of international standards will not significantly erode the role of jurisdictional standard setting bodies in the accounting profession. Rather, their relevance is enhanced with the evolution and assertion of complimentary new roles in the global accounting arena as well as preservation of on-going traditional roles in their local environment.