Issues in Contemporary Accounting: Differences in Accounting Standards

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INTRODUCTION Through history and the many years of accounting practice, a lot of accounting theories have been developed. Interestingly, many of those theories are grounded on the basis of prescribing and proposing how accounting processes should be performed. These are known as normative theories of accounting as they are not built on observation, but rather upon the theorist’s deductive judgement, and subjective opinion (Goble 2009). Accounting conceptual frameworks are good examples of normative theories as they provide guidelines of what accounting steps should be taken and suggest what ought to be done in relation to accounting principles and practice. The International Financial Reporting Standards (IFRS) are principles-based…show more content…
Corporations must conform by the financial reporting requirements of the stock exchange that it wishes to be listed on. Hence, if every country used the same accounting methods, worldwide stock exchanges could profit as more companies would be eligible for listing, and ultimately, the volume of securities transactions will increase as well (Diaconu 2007). A final argument against countries using different accounting methods is because it only generates more costs, especially for developing or other countries that do not have a national standard-setting body for accounting (Posner 2008). The harmonisation of international accounting methods would benefit these countries because they would not have to invest scare resources to undertake the full process of creating and regulating national accounting standard-setting agencies (Posner 2008). Arguments for different countries using different accounting methods Even though there are many strong arguments against countries using different accounting methods so that there would be more comparable and transparent distribution of accounting information, there are also some arguments for countries to maintain their own accounting standards and methods as well. 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
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