A Sound Financial Reporting System, Supported by High Quality Accounting Standards and Backed by a Solid Regulatory, Governance and Ethical Framework, Is a Pre-Requisite for Economic Development.

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“A sound financial reporting system, supported by high quality accounting standards and backed by a solid regulatory, governance and ethical framework, is a pre-requisite for economic development”. Accounting has been around since the beginning of civilization and played an important role in the development of cities, trade and the concepts of wealth. Nowadays, business is very complex and therefore there is an increased need for providing accurate and reliable financial information. Moreover, according to ACCA’s beliefs, the importance of financial reporting and accounting standards is significant not only for the accountancy profession, but also for the world economy. [1] Dr Joe Sumners, Auburn University, defines economic…show more content…
Equally important concern is regulatory framework which represents a set of laws and regulations that outlines the legal requirements to be met by the companies. The last significant issue in financial reporting relates to ethics. Ethical standards are designed to produce relevant and reliable information for decision making. The Code of Ethics for Professional Accountants was prepared by the International Ethics Standards Board for Accountants. IESBA is an independent body which sets standards within the International Federation of Accountants. Before starting discussion on the relationship between above described terms and economic development, it is very important to point out a negative influence of the credit crunch on the entire accountancy profession. The causes were various, but from a corporate governance perspective, the difficulties were in the weaknesses in reporting on risk and financial transactions and a lack of accountability generally within organisations. ACCA believes that “the credit crunch can therefore be viewed, in large part, as a failure in corporate governance”.[5] In addition, this raised the issue of moral and ethical failure. The benefits of international accounting standards play an important role for accountancy profession, however still risk of complex accounting standards exist. The IASB issues international accounting standards and also financial reporting regulations that are imposed by the EU, and this can lead

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