THE EFFECTS OF GLOBALIZATION ON ACCOUTING

Abstract

As Joseph Stiglitz, the 2001 Nobel Prize in Economics winner, has suggested, ‘Almost overnight, globalization has become the most pressing issue of our times’. The process of globalization has greatly affected accounting and we are today in an era in which there are serious attempts to develop global regulation of the financial information in financial statements. The major stated reason for creation and developing of global International Financial Reporting Standards has been the need for the support of free movement of funds to accompany the globalization of capital markets. If markets are to function properly and capital is to be allocated efficiently, investors require transparency and must have the confidence that financial information accurately reflects economic performance. This research paper analyses the effects of globalization on accounting from three perspectives, which include effects of the International Financial Reporting Standards (IFRC), management accounting and the threats and opportunities for accountants.