Lingua Franca for Accountants

Business is business, whether you're in Baltimore or Bangladesh. But you may be surprised to learn that accountants don't speak a common language worldwide. That may soon be changing. Under a new proposal by the Securities and Exchange Commission, some U.S. companies may begin using international accounting standards as soon as 2010.

The SEC's move is a huge endorsement for International Financial Reporting Standards, or IFRS as it's known for short. In recent years, IFRS has been gaining momentum around the world, with more than 100 countries using these principles. But as long as regulators in the U.S., the world's biggest securities market, weren't using IFRS, it was questionable whether or not it could be considered a truly global standard.

While IFRS isn't perfect, it makes life a lot easier for international investors. One of the most frequently cited concerns about international investing is that differing accounting standards are used worldwide. As a result, it can be hard for investors to make "apples to apples" comparisons between, say, a U.K. company and its Japanese competitors. With the adoption of IFRS, it will be easier than ever for investors to compare the performance of companies in their portfolios.