More than 100+ countries are either following or have announced the plans of formally adopting the IFRS.  Even U.S. which does not be left behind in this race has announced the formal plans to possibly adopt IFRS (the SEC is still reviewing this requirement and the final decision would be taken in 2011).  Europe and Australia are already under IFRS.  Canada and India also have formal plans for IFRS adoption in 2011.  Now Japan has joined the race by announcing its plan to adopt IFRS.  So what does it mean for the global standard setters?  All the countries would like to have their own say to modify the accounting rules such that the rules reflect their own business practices.  So as reported in Reuters article - ” Japan seeks bigger say on global accounting rules”, Japan is aiming to build a coalition amongst the Asia-pacific countries.

The excerpt from this Reuters article states:

“In the past, it was as if we were trying to wrestle from outside the ring. But now it’s different. We’ll be using (IFRS). That makes a whole lot of difference,” said Noriaki Shimazaki, a top official in charge of accounting rules at Japan’s biggest business lobby.

“And we also have to think about how we can avoid being knocked out of the ring,” said Shimazaki.

Now the power struggles starts as to who has more say in the development of the IFRS rules at the International Accounting Standards Board (IASB), which is a privately funded accounting standard setter.

Out of 15 seats on its governing board, five are occupied by Europeans and four by the United States and just one from Japan. Some Japanese accountants argue they are under-represented, making them reluctant to follow international rules.

So if Japan can be a leader in the Asia-pacific region, then why not other countries such as China, Australia, India or South Korea. It would be fun to watch this power struggle.  Also what would happen if some rules that are favourable to one country are not favourable to the other country?  So for now let us sit back, relax and enjoy the show.

Please post in your comments as to how you see the future of global accounting standards taking shape.

1. Emerging markets have very little choice. They have to join in the globalization process, i.e. they would have to sooner or later have to adopt the global financial reporting accounting standards.
2. Applying the accounting standards in the emerging markets may either render international standards hard to be applied in those emerging markets, or may even lead to different results unintended by the standard setters.
3. Lack of Participation by Emerging Markets in the standard setting process.  The bottom line being that if the accounting rules are to apply to everybody, then everybody must have a say in setting the rules.

Click here to read the full speech which also provides some specific implementation issues for Segmented reporting, Debt restrucuturings, Goodwill impairment