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auditor is retained and paid by the client, thereby making the auditorbeholden to the client and its management. As a consequence the auditor,though he or she might not realize it, ends up seeing things through theeyes of management. While it is still too early to determine which viewwill ultimately turn out to be correct, SOX will undoubtedly significantlyaffect the accounting profession.
International Accounting StandardsA truly global economy emerged during the 1990s, as many U.S.companies generated significant amounts of revenue and profits inforeign markets. Multinational companies are faced with decisions on theallocation of resources to their most efficient uses. These allocationscannot be accomplished without accurate and reliable financialinformation. Companies seeking capital or investment opportunitiesacross national boundaries face cost and time issues. Capital-seekingfirms must reconcile their financial statements to the accounting rules ofthe nation in which they are seeking capital, and investors must identifyforeign reporting differences. The increasingly global economy requiresthat this process be simplified. Thus there is a push to harmonizeinternational accounting standards.The IASB is an independent private-sector body that was formed in 1973to achieve this purpose. Its objectives are1.To formulate and publish in the public interest accountingstandards to be observed in the presentation of financial statementsand to promote their worldwide acceptance and observance2.To work generally for the improvement and harmonization ofregulations, accounting standards, and procedures relating to thepresentation of financial statements45These objectives have resulted in attempts to coordinate and harmonizethe activities of the many countries and agencies engaged in settingaccounting standards. The IASB standards also provide a useful startingpoint for developing countries wishing to establish accounting standards.46