This paper discusses the consequences of worldwide accounting diversity on corporate management, investors, stock markets, accounting professionals, and accounting standards’ setters. The paper will also explore the arguments for and against the convergence of international accounting standards. A lot of work has gone towards the convergence of IFRS and U.S. GAAP. FASB and IASB concurrent released two exposure drafts (EDs) in 2005, which established Phase II of the Business Combinations Project in the U.S., and internationally, the IFRS 3 Business Combinations Project. FASB has issued a number of EDs as part of its Phase II work. However, to better understand the IASB Business Combinations Project Phase II, it is important to highlight some of the issues related to the first phase of the project. The scope of Phase I included a definition of a business combination; method(s) of accounting for a business combination; accounting for goodwill (and negative goodwill) and intangible assets acquired in a business combination; provisions (liabilities) for terminating or reducing the activities of an acquire; initial measurement of the identifiable net assets acquired in a business combination; date on which equity instruments issued as consideration should be measured; disclosures; and transitional provisions.