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GLOBAL COMPARABILITY IN FINANCIAL REPORTING: WHAT, WHY, HOW AND WHEN?

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GLOBAL COMPARABILITY IN FINANCIAL REPORTING: WHAT, WHY, HOW AND WHEN?
De La Salle Professional Schools, Inc.
Graduate School of Business

COMMENTARY: GLOBAL COMPARABILITY IN FINANCIAL REPORTING: WHAT, WHY, HOW AND WHEN?

REACTION PAPER

The commentary paper mainly deals with the evolution and convergence of accounting standards. In response to comparability & convergence issues that have arisen to date, the commentary has discussed what comprises global comparability in financial reporting, why it has arises and how they could make it into reality and its timeline for estimated actuality. With the activities and interests of investors, lenders and companies becoming progressively more global, there was a growing participation and awareness in a number of discussion to increase a worldwide accepted, high quality financial reporting framework which is also the effect of development in global markets, the aspiration of multinational companies for one set of financial statements, and the command for one general global reporting language. It was mentioned in the paper that “comparability results in like things looking alike and different things looking different” which could be deciphered as same transaction but can be accounted differently. ‘Comparability’ is a very difficult notion to understand and believe even within a country, let alone globally, but we have not really had much basic literature or education that helps us understand what is meant by comparability when we have it, and when we do not. But in accounting what are ‘things’? And how do we perceive and identify ‘like’ and ‘unlike’ things? Accounting is an artifact, not articles of furniture or material. Indeed, comparability is very significant and important to investors. Comparability across financial statements within, and across jurisdictions, is very essential for the financial analyses investors perform during their capital allocation process. And, as we know, such capital allocation decisions are increasingly more global as investors
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