Under German accounting standards, Daimler reported a profit of 168 million Deutschmarks in 1993. Under U.S. GAAP standards, the company reported a loss of almost a billion Deutschmarks for the exact same period. You can just imagine an investor s confusion and concern. As more investors seek access to foreign markets, and more companies seek capital worldwide, the need for a common business language has become compelling. Broader horizons for new business opportunities demand financial reporting standards that supersede national borders and cultural customs.
Progress is already well underway.
In December 1998, the International Accounting Standards Committee completed the last major project in its core standards work program. Earlier this year, the International Organization of Securities Commissions and the SEC began their assessment of the completed standards. Whatever standards take form, at the most basic level, investors must be assured that financial statements are comparable. High-quality international accounting standards will provide all investors with a basis to make the most informed business and financial decisions. But as the pace of today s business brings even greater urgency to the need for these standards, we must not sacrifice certain basic principles.