Do We Need a Globally  accepted Accounting System

Aqil Harris. ACCA June Batch. 17 November 2017.

Of all the things that makes us human is the fact that we value things.Be it the present at valentines or the latest car on the magazine cover.
The only difference is that we assign value according to our needs.simply said according to our emotions.
This is where the need for a global system of accounting steps in.
In order understand it’s impact how about we imagine a lunch. A lunch with piri piri chicken straight from South Africa to beef ribs from a ranch in Australia to jalebi from the south of India to close the deal.
While you are having the meal, you are creating employment too.how?
Let us see.
A uniform accounting system can ease the functioning of businesses where reporting can be learnt and understood by any govt body and the public.This can help Multinational companies to become more versatile and take risks in new markets.
This is how your plate got filled with food sourced miles away.
Secondly ,volume of trade can  increase drastically  due to the lifting of unnecessary reporting procedures based on national standards of the country.Thus facilitating cost cutting.
Also,This can help sky rocket the transportation industry with customers demanding goods from different  corners of the world and thus creating employment.

let us take another case contrary to the above.
Cuba has some of the healthiest, most long lived residents in the world thanks to government investment in scientific research and preventive medicine.During the past few months the country has made 3 major medical innovations in chronic diseases such as cancer and diabetes. Suppose a start up in India wants to replicate these innovations that could potentially save millions given the state of healthcare available.The first hurdle is obtaining the license to produce the medicines for trials.This is cumbersome because India has different set of rules regulating medicines as compared to an island nation hemmed in by a 54 year trade embargo with the United States.As a result the medicines will never see the light of day due a simple problem of differences in licensing procedures.This is the same situation that exists in accounting procedures, each country requires a custom method of keeping records.take for example the ban on unlawful gain in middle east countries or simply the method of taxation for the newly introduced GST scheme in India.These requirements make it difficult to make an accounting system that is accepted by all countries.

All of these seems like the future of accounting given that the benefits are immense with a few nudges and tweaks supported by world governments. True that there should be harmony between reporting standards the world over hadn’t it for troubles of regional currencies.Only a global currency can bring a global accounting system worthwhile.why?
Even if there is a global system of accounting,How can we compare reports from different countries for investments purposes, if the system is rigged by a single dominating currency, the dollar and with China artificially suppressing the value of their currency, the yuan, to make it’s products more competitive when priced in other countries?

I believe in the need of a global accounting system along with a global currency which is enforced, monitored and administered by an independent international body in the likes of the UN.The result of which is the “ restoration of economic activity and international trade for the existence of durable peace “ -James Forrestal (Former United States Secretary of Defence. 1892-1949)

One of the major impacts that this accounting system can bring about is transparency and stronger audit trails.The international body can be a store house of transactions happening worldwide bringing in better accountability and policing. This can help end terrorist funding and other illegal activities.Little to say this system can show the when, what and how of a transaction.Which can be nightmare for privacy.But if privacy where ever a concern you should not be on social media anyway.
Besides this will prove a major concern for larger companies who churn out tampered reports under the veil of complexities of national standards of reporting.Till a system like this comes into force, companies can sell ammunitions in Battlefields, dump sludge in open seas , create revenues over billions overnight and tax havens become tourist paradises.A global accounting system will wrong them all.

It’s no wonder we have orbiters around Mars and a 15th century accounting system.