The thought of implementing a uniformity in the accounting standards has been discussed for a long time in the world of accounting. In fact, there is a quote from Financial Times that stated “The goal of single worldwide accounting language has been a dream. Today it is fast becoming a reality, and the pace is picking up.” (Carmona and Trombetta 2008, p.456). Likewise, Ball (2006) had a great article discussing about the uniformity of the accounting standards. He had mentioned some interesting points such as the important of uniformity, as well as the disadvantages of it. Even though uniformity in accounting standards have been around for a while, it is still something that yet to be accomplished completely. In Ball (2006) stated his concern on this matter that even with the same standards it may be still some differences in the reports. Thus, in this essay there will be discussions whether uniformity of accounting standards is needed in producing the financial reports along with the obstacles some countries may occur when try to do it.
This report discusses the accounting practices of the following countries U.K, U.S.A and China. An analysis of these different accounting systems will be conducted on issues such as the growth and background, social, economic and fiscal pressures that have led to each nations current characteristics. Concluding on the direction each nations accounting systems and practices seem to be heading towards.
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.
This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This
Globalization has been changing the world. It has interconnected people, nations, and even businesses. Today´s business can share information to investors around the world thanks to the intelligent software of the actual society. Being more specific, the way in which investors and users evaluate businesses performance is through the information contemplated in their financial statements. These financial statements illustrate the current assets, liabilities, and stockholder equity a company has in order to help users take economic decisions. However, not all the companies are regulated to provide the same structuralized information around the world. Each country possesses its own accounting standard that regulates the preparation of financial statements of a company. In that way, companies’ information might differ between countries making the comparability between financial statements difficult to be implemented by users in order to assess the performance of foreign businesses. In view of the need of a globally accepted accounting standard that promotes uniform standards for worldwide financial reporting, the International Accounting Standards Committee (IASC), which then becomes replaced by the International Accounting Standard Board in 2001, was created (Cathey and Schroeder 130). The IASB issues International Financial Reporting Standards (IFRS) that stands as the set of accounting standards that prepare and present the financial
Why do we study comparative accounting? Countries around the world have different aspects such as taxation, legal systems, culture and colonial influence that differ the way accounting is reported. Ultimately the need for fair presentation is the final objective to comparative accounting. Thousands of years ago when accounting was first practiced, each country practiced financial reporting according to the power and strengths in their country, regardless of how accounting was reported in neighboring countries. Nowadays, because the world is becoming more globalized and harmonized, standard-setters feel the need to report their accounting in a uniform way. The International Accounting Standards Board [IASB] was formed as a non-for-profit
A set of internationally recognized accounting standards facilitates capital flows across borders. Globally accepted standards make financial information readily comparable for its users. Foreign investors are more inclined to put money into a U.S. company if they are familiar with the company’s financial reporting. Conversely, U.S. investors will find it easier and less risky to invest in foreign companies when they know the local accounting standards (Epstein 2009). This will make U.S. companies and capital markets more competitive, since it saves costly reconcilition of different standards. Preparers, investors, auditors, and others will benefit from these cost effieciencies, since a Results of an IFAC Survey among accounting leaders around the world with respect to the importance of convergence to International Financial Reporting Standards for economic growth in their countries:
In comparison with IFRS, the accounting standards proposed by the U.S. GAAP are a bit inflexible. My agenda is to find out the difference and the positive, negative effect as professional in international market.
This paper examined the relationship between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) and found that merging both accounting standards into one “worldwide” standard would be ideal for all investors. This paper analyzed GAAP and IFRS differences and similarities. A comparison and contrast of GAAP and IFRS was conducted. Discuss roadblocks to achieve “worldwide” accounting standards. GAAP and IFRS have to
The 2007 financial crisis renewed attention on accounting standards as stakeholders sought possible contributors to the crisis (Hellenier, 2011). Accounting standards are set regulations that limit the manner in which transactions are made and accounted for. They are meant to instill sanity into the financial system. The 2007 financial crises has been attributed to weak financial regulations which encouraged accounting malpractices like mis-presentation of the financial situation of businesses in order to keep investors interested (Hellenier, 2011). Accounting standards set requirements for the preparation and reporting of financial information. They, therefore, help minimize such incidences by facilitating the flow of accurate financial information to investors, creditors, regulators, banks, etc (Hertog, 2003). Having an internationally acceptable system of presenting this information brings sanity to the financial system in addition to increasing investor and consumer confidence in banking institutions, businesses, governments, etc.
Over the last decade, the way in which financial reporting is carried out has seen some significant advancements. One of the most momentous changes has been the introduction of International Financial Reporting Standards (IFRS), which have been adopted broadly throughout the world, with one major exception, the United States. Before accounting standards can be considered truly global, this exception has to be resolved. The prospect of such an occurrence took massive strides in 2002, when the Financial Accounting Standards Board (FASB); responsible for standard-setting in the US, announced their intention to work alongside the IASB in order to converge IFRS with US GAAP. For the first time, a truly global set of accounting standards seemed a
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).
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
Under the economic globalization and the rapid development of Islamic finance in recent years, the business activities with Islamic countries became a worldwide focus. However, it is notable that the conventional accounting system would face a challenge with the compliance of Shariah. Therefore, the Islamic accounting standards AAOIFI were developed due to of the existing problem with the adoption of the convention accounting standards (IFRS). In this chapter, to illustrate the difference among IFRS and AAOIFI, the general description of these two accounting standards will be presented, followed by the distinguishing between the adoption as well as the comparison of some specific accounting treatments. At the