Global convergence of financial reporting standards seems like an achievement that would benefit everyone in our ever-connected world but also somewhat impossible if one were to consider Professor Sidney Gray’s model. This particular model suggests that a country’s cultural values have a major impact on the accounting values that are deemed to be the most important. The accounting values then are a determinant of how financial reporting is practiced in that area of the world.

“Gray identified four widely recognized accounting values that can be used to define a country’s accounting subculture: professionalism, uniformity, conservatism, and secrecy.” (Doupnik, Perera 2015) From country to country, every culture is different and thus the level of importance that is placed on each of these categories changes which then affects financials rules and reporting practices. Attempting to converge global financial reporting standards into one system that everyone could use would never work since, as can be seen through Gray’s model, accounting practices are centrally related to a country’s identity.

As shown in Figure 2.8 on page 40, all parts of this identity from ‘demographics and history to legal systems and capital markets has influence on the accounting values of a nation. This illustration also contains Hofstede’s cultural dimensions of individualism, power distance, uncertainty avoidance, masculinity, and long-term orientation which Gray built upon to develop his model. These five dimensions, “can be used to describe general similarities and differences in cultures around the world.” (Doupnik, Perera 2015) They are like the building blocks that societies use to create their accounting values which then ultimaly turn into their financial rules and reporting practices.

Even though it can clearly be seen that accounting values are very personal to each independent nation, there is still a major push to converge reporting standards and get as many countries as possible onto the same system. An article in the Australian Accounting Review describes the perceived costs and benefits of attempting to introduce IFRS in Japan. The researchers found that, “IFRS adoption and implementation is likely to impose significant costs on many Japanese listed companies.” (Ozu 2018) They related this to costs associated with changing IT systems, training/re-education of accountants, and the retrospective implementation of IFRS.

They also d looked at the benefits of IFRS and all the cost associated with such an enormous task. They found that, “benefits would seem to be moderate, at least in the short term, with substantial benefits unlikely to accrue except in the case of large and overseas listed companies.” (Ozu 2018) Mainly, the most substantial benefit would be that financial reports of publicly traded companies would be more easily compared which would give a great advantage to , investors. It would also allow international corporations that are publicly traded to only prepare one set of financial statements which would be a significant cost savings. This particular research is not necessarily indicative of how IFRS implementation would be in other countries, but it is still a good example of a major world power that would be changing its entire accounting system.

The global convergence of financial reporting standards is certainly something that seems like a benefit to everyone in the developed world. One system could unite many different nations and make free trade even easier to carry out. It would also eliminate more barriers that still hinder the world financial markets, but it can clearly be seen that accounting practices are influenced by the core values of every country. Trying to blend them all together is a noble effort but something that appears to be more of a dream than a reality.