Accounting Criteria

1099 WordsJul 11, 20085 Pages
Accounting Reporting Criteria Paper Accounting reporting criteria includes many factors and covers many elements. From Fundamental Financial Accounting Concepts, “accounting is so important that it is often called the language of business. In fact, accounting affects not only individual businesses but also society as a whole” (Edmonds, Edmonds, McNair, Olds, & Schneider, 2006, p. 4). Global business requires added consideration in the way of accounting reporting criteria. With heightened consumer protection becoming increasingly important, regulation of American reporting criteria such as The Sarbanes-Oxley Act (SOX) is common to hear or the Security Exchange Commission’s (SEC) requirement of management submitting a financial statement in…show more content…
GAAP procedures, standards and rules change as the needs of society changes. Although must foreign companies convert to the U.S GAAP the person at the foreign company applying the GAAP principles may not be up to date on the rules and regulation (AICPA, 2008). The differences in accounting procedures make accounting difficult to understand. In addition GAAP standards and terminology of the financial statements and accounting procedures are different in the U.S than in other counties. For example, annual reporting is quite different in foreign countries. The following graph demonstrates such examples. U.K. terminology U.S. equivalent or definition Accounts Financial statements Debtors Accounts receivable Hire charges Rent Stocks Inventories Turnover Sales and other operating income (AICPA, 2008, 19) There is difficulty in interpreting financial statements due to the different terminology of accounting procedures. Even if foreign companies are up to dates with the Generally Accepted Accounting Principles (GAAP) the language can create misunderstanding of data and financial information. For example, foreign companies may translate the language into English; they may not provide any information about the accounting practices and currency. This creates barriers since currency is different in foreign counties as well. More United States companies are finding
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