BY Allen Kenney BY Allen Kenney
In a world that has grown as interconnected as ours is today, the notion of “convergence” takes on great significance. Unfortunately, attempts to promote convergence—despite the best
of intentions—can produce results that sounded much better in
theory than they actually are in practice.
As global markets have become evermore intertwined,
discrepancies in the language and rules of business between
locales and industries can create frustrating obstacles to economic growth. With its recent decision to explore the issue of
fair value accounting for investment property, the Financial
Accounting Standards Board has taken a major step toward
synching the U.S. accounting model with that of the rest of the
world. The goal: Offer investors another uniform measurement
metric [of comfort and certainty] when it comes to diversifying
their portfolios through real estate investment around the globe.
Efforts in Washington to reform the financial system illustrate
convergence’s complications. For example, one proposal on the
table could impose significant costs and requirements on businesses that use derivatives to manage risk. While the fallout from
the latest financial crisis demonstrated the need to reconsider the
regulation of complex financial instruments, instituting rules that
hurt firms that use derivatives for legitimate business purposes
could be a harmful unintended consequence.
Obviously, trying to create an outcome or singular perspective that correctly balances a range of views and practices is a
difficult proposition. That goes for every scenario, from a couple
friends ordering a pizza to hundreds of politicos trying to revolutionize a health care system. That doesn’t make appropriate
convergence impossible, though.
REIT.com Video: To watch a video interview with
NAReIT’s Senior vice President of Financial
Standards, george Yungmann, discussing global
final reporting convergence, visit
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