1. High quality accounting standards are critical .......... the development of a high quality global financial reporting structure.

2. Different accounting traditions have developed around the world in response to varying needs of users for whom the financial information is prepared; in some countries, accounting standards have been .......... primarily by the needs of private creditors, while in other countries the needs of tax authorities or central planners have been the predominant influence.

3. Establishing and maintaining high quality accounting standards are critical to the U.S. approach to regulation of capital markets, which depends on providing high quality information to facilitate .......... investment decisions.

4. High quality accounting standards are essential to the efficient functioning of a market economy because decisions about the allocation of capital rely heavily on .......... and understandable financial information.

5. When issuers prepare financial statements using more than one set of accounting standards, they may find it difficult to explain to investors the accuracy of both sets of financial statements if significantly different operating results, financial .......... or cash flow classifications are reported under different standards for the same period.

6. Questions about the believability of an entity's financial reporting are likely where the differences highlight how one approach .......... poor financial performance, lack of profitability, or deteriorating asset quality.

7. Also, the audit is an important element of the financial reporting structure because it subjects information in the financial statements to independent and objective .......... increasing the reliability of those financial statements.

8. Recent events in the United States have highlighted the importance of high quality auditing standards and, at the same time, have .......... questions about the effectiveness of today's audits and the audit process.

9. Audit firms should have a responsibility to .......... to the highest quality auditing practices, on a world-wide basis, to ensure that they are performing effective audits of global companies participating in the international capital markets.

10. Historically, audit firms have developed internal quality control systems based on their domestic operations; however, as clients of audit firms have shifted their focus to global operations, audit firms have followed .......... and now operate on a world-wide basis.