Examine the Advantages and Disadvantages for China of Harmonization of Accounting Standards Under the Current Economic and Social System

The IOSCO plan does not cover accounting standards.(66) These standards are important for providing financial statements in a scheme that are prepared in the similar manner as those by issuers from other countries. The development of international accounting standards is the subject of a distinct project by IOSCO, and many accounting professionals who are concomitant with that undertaking are hopeful that a satisfactory solution is within reach.(67) Supposing, however, that an agreement is possible on a core set of financial standards and that they too are embraced by securities regulators as compulsory for foreign issuers, the road to commonality has at least two other impediments.

Accounting standards are important. For example, if accounting is considered as the language of business, accounting standards are its grammar. Properly developed and implemented, they can encourage business expansion and help regulate the economic system. High-quality accounting standards can facilitate the flow of information from businesses to a range of different users. These include investors, banks, creditors, the revenue commissioners, regulators, employees and the general public. The availability of accounts prepared in accordance with recognized accounting standards encourages trade by promoting confidence in businesses.

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.

A variety of parties are interested in and affected by the development of accounting standards. Various users of accounting information have discovered that the best way to impact the formulation of accounting standards is to attempt to influence the standard setters. The CAP, APB, and FASB have all come

From 1904, some people suggest that we need a uniform accounting standard in the world. After the work hard in more than half century, in 1973, international accounting standard committee has been found. Although this is a non-government organization, they set up accounting standard for all the country, which is convenient to international trade, comparison, and analysis. With the increase of recognition, there are more countries used it, but many organizations and people disagreed the standard. This essay will focus on the different attitude of initial recognition methods of International Accounting Standard 16: Property, Plant, and Equipment and discuss the advantage and disadvantage of methods and influence the reason why IAS will allow

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

To address the increasing challenges of legislating those governs our society today, “countries all over the world have begun to outsource rulemaking to bodies consisting of people familiar with the subject. For that reason, policymakers rely on private entities to establish financial accounting and reporting standards” (Donald Kieso, 2003, Intermediate Accounting). The two most influential standard-setters are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

International Accounting Standards (IAS) in effect since 2002 and International Board (IASB) together, provides the conceptual framework of financial reporting in the UK, in effect as of 2005. They have been working together to meet International Financial Reporting Standards (IFRS) issued by International Finance Committee (IFC) which have been endorsed by the EU. IFRS uses a principles approach designed to provide flexibility, transparency and comparability allowing a robust system in providing investors with relevant and reliable financial data, Randy, M (2014). In this essay, countries such as China and the US will be used as examples where the impacts, strengths and weaknesses will be analysed by comparing and contrasting their progress. As a result, a judgement will be made of which country has progressed well in converging to the standards and whether benefits can be seen to the country as a whole.

increased international compatibility of accounting standards should occur, because they are developed in the context of a conceptual framework that is similar to the conceptual frameworks used by the International Accounting Standards Board (IASB) and major overseas national standard setters;

For decades, countries have designed their individual accounting standards principle-based, rules-based, tax-oriented, or business-oriented. Globalization has led to the greater needs with regards to harmonizing the standards (Kimmel, 2013). By late 1990’s the dominant standards were the IFRS (International Financial Reporting Standards) and U.S. GAAP (Generally Accepted Accounting Principles). Thus, both the standard setters namely; FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) launched a convergence project prior to the IFRS being essentially adopted by several countries. Measures are being taken to reduce likely impacts the frameworks would have on financial statement and reduction of last minute changes (Kimmel, 2013).

Then, comparability of information needs an explanation. This leads into either one standard for accounting procedures or different standards with firms obliged to mention which standard they have chosen. In the past, business fought constantly against the uniformation of standards and the problem of the latter suggestion is that it needs skilled users to evaluate the impact of the different standards on the financial statement. As only a limited group will be able to do this, the number of possible financers is reduced. Capital could become more expensive since in free market systems a broader supply of capital should result into lower prices for capital and the reverse effect is true.

According to Lutz and Eberle (2008), a lot of countries prefer to have their own standards because culture plays a big role in developing and setting national accounting standards. Thus, compliance with international

are the differences between nations. These alteration in Accounting Practices are results of specific environmental factors, which have shaped them. Therefore, one of the first problems with standardisation I conclude is that the result of the harmonisation process could neither be a copy of the Anglo-American Model nor one of the Continental-European Model. The Anglo-

Furthermore, the idea of accounting standards made accountability for firms’ finances simpler, as numbers could more accurately be tracked, making issues like stocks and taxes less convoluted from company to company. In theory, if companies’ numbers were not comparable, then the stock markets would be extremely inefficient or simply obsolete.

There have been development of new economic competitiveness and emergence of a well improved formation Age that is ever changing; very complicated capital and financial markets; and improved instruments of finance. There is a relatively increase demand on the policy making decisions. This has led to increased requirements need to be approved in terms of the accuracy of the information provided ;the information provided need to be reasonable; for a trusted personnel and efficient and effective accounting and financial information. However, how demanding it is for the internal operation of the organizations to maintain, not retain the information; try to provide the required information; and the international market has a significant role to play in making sure that the rules, policies and procedures created are effective. this is achieved by ensuring they do not actually compromise some of the organizational objectives and goals but later enhance in acquiring of their goal by providing flexible systems in terms of accounting demands and procedures for instance in the terms of revenue, intangible assets , lessees, and liabilities. Mainly Accounting standards have created and promoted modern financial theory and established the time value of money, the efficient interest method and asset analysis /valuation their like a deferred payment in the acquiring of intangible assets ,capital value estimates of residual disposal confirmation and financial instrument