Discuss the Assertion That the Fair Presentation Requirements of Ias1 Will Undermine the Uk’s View of True and Fair.

As the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand.

Historically ,it is seen that there are numerous number of disputes in the field of financial reporting among different professionals, regulators and theoretitions .most of these disputes are related to the valuation of financial reporting components.the current curve in the progress of valuation is the push for and against the fair value approach.the purpose of this research is to examine the arguments on the use of fair value accounting and to identify the issues related to implementation of fair value accounting standards. Further, the results of literature related to role of fair value accounting within financial crisis are also investigated.

Accounting Information is the pearl of any organization. It is how a business provides its investors as well as other stakeholder parties’ direction towards a healthy economic decision in favor of the business. Regulation of these information and standardizing the process would lead to that organization solving the problem of ‘information asymmetry’. (Watts & Zimmerman, 1978)

In the 1970’s there was an increase in discussions about unifying reporting procedures. With the increase of business dealings between companies in different countries the experts started to ask the question: “Why can’t we agree on a single reporting practice”? Now, logic would have it that anyone looking to invest in a company or do business with a company in another country should be able to look at their financial reports and make a sound decision. The problem arises when a company in the US is examining a company in Germany and the American company is unable to make a confident assessment of the financial standings of the company in Germany due to the dissimilarity in the financial records. The lack of transparency (and possible inaccuracies) suggests that it

Define the extent of judgment in planing financial statements by formulate the characteristic, functions and limits of financial accounting and reporting. It also increases comparability of financial statements by decreasing the number of alternative accounting methods. If standards were derived from a reasonable style of concepts, this will lower the accountants error to political tension. Likewise, reporting requirement will be more constant and fair because they will stem from an orderly set of concepts. The need for specific accounting standards will be reduced. The setting requirement will be more economical because issues should not be re-debated from different viewpoints. Enhance the credibility of financial reporting and in turn help to reduce accounting’s vulnerability to political

Accounting rules and practices are wildly varied around the world today, and doing international business in that type of environment presents many difficulties. From language, cultural, and religious barriers to currency differences and accounting practices, it is difficult to see where businesses stand without a common standard to guide them. Some say that education, culture, and sometimes religious differences are the main factors for such variations (McGee & Bandyopadhyay, 2009). It would seem logical if all these differences could be harnessed into one set of accounting standards for everyone to use.

The Accounting profession has its fiduciary duty to deliver the information and make correct decisions. To support the high quality of information accounting standards constantly faces difficulty to keep the framework up to date. In the recent global financial crisis fair value has come under the light of examination. Some critics have blamed the global financial crisis on market to market accounting (fair value accounting). I must say fair value increase firms transparency. Subsequently, through this rule, the obligation of the accounting mention above is further completed: financial specialists are getting essential data on which they make their

Fair value measurement had gained its hold decades ago in various western world. Relevant jurisdiction and accounting standards had authorized fair value as essential recognition of balance sheet and income [ WR LandsmanFair value accounting for financial instruments: some implications for bank regulation 2006, BIS working paper 209, University of North Corolina Kenan-Flagler Business school]. On 1st August 2008, the scenario behind accounting practices in Malaysia face a regulatory change with the introduction and adoption of FRS 139 “Financial Instruments: Recognition and Measurement” with effective date of 1st January 2010. This is deemed as the first step in recognizing fair value accounting as a reliable and updated practice or model.

First and foremost, advocates claim that fair value accounting provides accurate asset and liability valuation on an ongoing basis to financial information users. This statement could be supported through the research of Zijl and Whittington (2006), which concluded that fair value is estimated by a market price obtained from an active and well-informed market. In other words, we could ensure that the fair value

The General purpose of a financial report is to meet the needs of a specific external parties in accordance with general purpose financial report. In order for a company to achieve this they must first comply with certain accounting standards and NZ framework. Examples of accounting standards such as being “true and fair” which means that the financial statements of company has to be free from misstatements and faithfully represents the financial performance and position of a company,( True and Fair, 2014). The true and fair value of financial statements is widely recognized as one of the best responsibilities of the management of a companies in the corporate law of other countries including NZ. There are a different entity or business that audit company’s financial statements and it’s up to the auditors to decide whether a

ACC307 INDIVIDUAL ASSIGNMENT TASK 1: Contemporary Issues of Accounting Theory Fair Value Measurement Overview After the International Accounting Standards Board (IASB) released the IFRS 13 Fair Value Measurement in May 2011 for the purpose of completing its joint project with the US Financial Accounting Standards Board (FASB) on fair value, the Australian Accounting Standard Board (AASB) released the Australian equivalent - AASB 13 Fair Value Measurement in the September of the same year. This standard permitted early adoption but generally started to take effect for the financial reporting periods beginning from 1 January 2013. This new standard requires no new requirement for the adoption and but it was accompanied with the issuing of AASB 2011-8 Amendments to Australian Accounting Standards arising from the AASB 13 which has made consequential changes to 32 standards and 9 interpretations for the adoption in Australia. The new standard attempts to unify IFRS and US GAAP by specifying how entities should apply the fair value measurements that applied in previous IFRS standards. It clarifies and redefines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”, sometimes referred to as an “exit price”. It also sets out a single source guidance for a robust measurement framework to ensure that the requirements are applied consistently and have clear

The paper proposes research covering fair value accounting usefulness, the gauge of reliability and relevance in accounting through times of early development, financial crisis and recent views. This review aims to realize a comprehensive study of relevant literature in financial accounting with fair value as the main topic. The review attempts to answer the question Is fair value relevant and reliable for financial accounting? Does fair value signify decision useful information? What are the basic properties of fair value and its contribution to the decision usefulness objective? To achieve the proposed objectives, the review analyses …. Articles divided into three themes: various views of fair value accounting, are fair values beneficial for financial users and applications issues and recommended improvements. In this research the purpose behind each study in the field of fair value is important. Fair value accounting has become a crucial principle of measurement internationally. Much discussion covers the relevance and reliability of fair value. Therefore, constructing a review on this subject based on past research is to improve the literature.

The influence of culture on international accounting standards cannot be analyzed without some sort of framework where accounting and social values can be linked. The foundation of this framework begins with the cross-cultural study of Geert Hofstede (1980; 1983). Hofstede’s study tried to distinguish significant aspects of culture that had an effect on people’s behavior in a professional capacity. He did this through a survey of people’s values across 50 different countries and three regions. Values were analyzed on the collective level and were thought to be the most

Accounting standard has been introduced after the World War II where every country has its own proper accounting practices such as the United States Generally Accepted Accounting Principles (the US GAAP). As time flies, international trade and foreign direct investment has experience a period of rapid growth where the companies begin to expand their business in a larger scale. Frequent international mergers and acquisitions especially by American corporations to the European companies has created the diverse accounting practices where comparing financial statements between country to another become very difficult to do. To lessen the difference and promote international harmonization in accounting practices, Sir Henry Benson, senior partner in the United Kingdom (UK) firm of Cooper Brothers & Co. led the founding of International Accounting Standards Committee (IASC) and issued the International Accounting Standard (IAS). Since 2001, the new IAS is known as International Financial Reporting Standards (IFRS) and has been issued by International Accounting Standards Board (IASB). Ball (2006) stated in his article that “the notion that uniform standards alone will produce uniform financial reporting seem naïve”. I strongly agreed with this for several reasons which I will discuss further below with real world examples.

The process of globalization in the financial markets has led to a growing emphasis on the standards that are to be maintained in the global market in accounting terms and has made increased efforts to acquiring the best standards which go along with all the internationally approved standards. The statements that are made in each country differ from each other according to certain laws, rules, standards, etc because the analysis and assessments about each transactions differ. Hence, this sometimes becomes very difficult to interpret because the methods of analysis are different which makes comparison, analysis and assessment quite difficult among different countries (Baker, 2008).