The need for standardized accounting policies and procedures is apparent in todays global economy.

An ever increasing number of organizations operate in regions demanding adherence to their local standards, making it necessary to provide reports in different formats. Global investors need a better way to compare their investment options and most importantly, a crisis started in one region of the world, whether due to accounting loop holes or not, has impact on other markets. The quest to accounting unity resulted in the International Accounting Standards Board (IASB). which established the International Financial Reporting Standards (IFRS). The IASB is becoming the global standard for the preparation of public company financial statements. (Gornik-Tomaszewski & Showerman, 2010, p59). As reported by GornikTomaszewski and Showerman in 2008, the Securities and Exchange Commission (SEC) proposed a roadmap towards the acceptance of the IFRS in the U.S. (p59). The project proved to be more demanding than originally estimated and the original deadline of June 2011 was an unrealistic goal resulting in the most of the boards work in 2011 focusing on standard-setting activities on the following five projects: financial instruments, revenue recognition, leases, fair value measurement and insurance contracts (Munter, 2011, p. 22). According to the IASB, insurance accounting has been in need of drastic change. In 2010 it introduced draft of proposals aimed at bringing more consistency and transparency into that area of accounting (Ladburry, 2010, p82). Since 2008 the IASB has been working closely with the FASB to make improvement to the current U.S. GAAP insurance-accounting regulations. The Boards overall goal for insurance contracts is to develop a common, high-quality accounting standard that addresses recognition, measurement, presentation, and disclosure requirements (Pounder, 2011, p21). Currently the U.S. GAAP uses a number of accounting

models depending on the contract characteristics. (p.21). In his article, Ladbury outlines three changes that are at the base of the insurance accounting transformation First, it should provide a comprehensive framework that will require insurers to provide information that is relevant to users of financial statements for economic decisionmaking. Second, it should eliminate inconsistencies and weaknesses in existing practices, by replacing IFRS 4 Insurance Contracts. Third, it is hoped the new system would also provide the comparability across entities, jurisdictions and capital markets that has potentially so hindered investment in the industry over the years. One of the main differences between the U.S. GAAP and IFRS standards is that in the U.S. permits greater netting of certain financial instrument and derivative arrangements than does IFRS, which in turn affects the amount of capital a financial institution is required to carry (Munter, 2011, p. 24). Additionally, the IASB is looking into simplifying the current U.S. GAAP accounting procedures by limiting the options an organization has when reporting its comprehensive income from three to two. (Munter, 2011, p. 24). The goal for revenue recognition is to come up with a set of standards that can be applied regardless of the type of transaction or industry (Gornik-Tomaszewski & Showerman, 2010, p59). This will have a substantial impact on the U.S. GAAP as has specification that vary depending on transaction and industry type. On one hand side, the U.S. GAAP has been criticized because of its complexity in this department, on the other, the IFRS is said to provide insufficient guidance for many complex revenue arrangements (Munter, 2011, p.24) Another accounting area which is to undergo considerate change is the treatment of leases. At present, the U.S. GAAP lease regulations are complex and allow for the off-balance-sheet treatment of leases(Munter, 2011, p.24). The Memorandum of Understanding drafted in 2008

between the two boards set a plan to ensure that any assets and liabilities arising from lease contracts are recognized in the statement of financial position (Gornik-Tomaszewski & Showerman, 2010, p61). Even though the changes seem to eliminate some of the complexity currently present within the U.S. GAAP lease recognition regulations, the process for lease evaluation and reassessment would change to a more likely- than-not rather than a reasonably assured threshold (Munter, 2011, p.25). The necessary changes to the regulations will take time but will be an answer to the criticism that the U.S. GAAP has been under for years. Many U.S. organizations already follow the IFRS regulations because of their operations in areas where it is mandatory. On the private sector side, the IFRS does a better job at meeting user needs and that is where the transfer to IFRS might take less time (Gornik-Tomaszewski & Showerman, 2010, p61). The accounting world will be undergoing a lot of changes in its quest toward financial market integrity. The need for the integrity is a driving force in the level of cooperation between the IFRS and the U.S. GAAP. The changes might take more time than expected, but the final result will be a set of standards that will not only allow for better accountability but also for an enhancement of overall world business and investment.