Multinational Corporations And The Standards Of Their Home Country That Have More Than One Way For An Issue

It highlights the importance of auditors applying sensitive and ethical judgments in all their engagements. Members have the responsibility to collaborate with each other to improve the art of accounting, as well as to maintain the public’s confidence. The auditor’s responsibilities are essential to an effective audit process because through planning, auditors should to communicate with each other, be very organized and discuss what and how to do things in order to serve the public. One of the most important parts in auditing is planning, for that reason responsibility is a must.

The goal of the accounting and audit professions is to provide statements and information on behalf of a firm that are reliable and relevant to users. In order to accomplish this goal, the accounting and audit professions have continuously evolved in order to meet the needs of said users. In this new age of accounting, we feel the need for accountants and auditors to further modify their methodology and process. With the focus of accounting and auditing staying the same, we in the profession must be sure to strive to produce valuable information to the end users.

Regardless of the cultural differences and setbacks of the convergence project, it was not all in vain. The project itself opened communications worldwide and had an active impact on U.S GAAP and International IFRS. From this open disclosure about standards, the boards were able to settle on many different comparable standards and added these to the existing rules from both sides. Given all of the differences in culture with regard to accounting, the ability to apply new standards that were established together is an incredible achievement in and of

Another challenge convergence faces is the fact that under IFRS, there are little industry-specific standards, which has led many commentators to voice “concerns about how IFRS would impact their particular industry” (AICPA, 2009). Other critics have voiced concerns regarding the uncertainty surrounding funding for the IASB as it’s “largely funded through voluntary contributions from a wide variety of participants across the world’s capital markets. The concern with that model is that it leaves the IASB open to the perception that organizations that provide funding could try to influence the accounting standards” (SIAC, 2012). This observation questions whether there is true independence of the IASB and the integrity of its standard-setting process.

There is a clear roadmap to social globalization and convergence of US.GAAP – IFRS Standard as prescribed by the Security and Exchange Commission (SEC) for users that set up financial statements in accordance with IFRS as issued by IASB. This followed would lead to a worldwide adoption of IFRS over the next few years. In his work, Barry (2009, p.26-27) states, “The advantage of a single set of financial reporting standards are manifest, particularly as internationalization of business activities became the norm. In particular, having uniform, high quality standards has been extolled as fostering international business relationships, with the goal being the facilitation of cross border capital flows and lowering the cost of capital _ the expected results of the anticipated reduction of perceived accounting risk”.

There are three main types of audits, financial, operational, and compliance. First “a financial statement audit involves obtaining and evaluating evidence about an entity’s presentation of its financial position, results of operations, and cash flows for the purpose of expressing an opinion on whether they are presented fairly in conformity with established criteria” (Boynton & Johnson, 2006). Next “an operational audit involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity’s operating activities in relation to specified objectives” (Boynton & Johnson, 2006). Last “a compliance audit involves obtaining and evaluating evidence to determine whether certain financial or operating activities of an entity conform to specified conditions, rules, or regulations” (Boynton & Johnson, 2006). The standards of GAAS apply to all three types of audits in more ways than one. First the general standards must all be adhered before any auditor can perform an audit in any entity. The standards of field work also must be followed while in the entity performing the audit. When reporting the results of the audit the standards of reporting must be followed.

With the number of countries that have switched to the International Financial Reporting Standards (IFRS) for their financial reporting, as well as the continued efforts made between the IFRS and US Generally Accepted Accounting Principles (US GAAP), it is evident that international convergence is an overall appealing idea for global reporting. With that said, US GAAP has worked with IFRS to create a universal standard; and while progress has been made to diminish variances between the standards, there are still large, if not unattainable, efforts ahead of us. The hype over a proposed uniform set of global accounting standards appears to be stunted by the lost efforts in the convergence project between the US GAAP and IFRS. As the Financial Accounting Standards Board (FASB) moves forward with its standards setting, there must be a reevaluation of the goal for reporting standards and efforts with the International Accounting Standards Board (IASB).

The international financial accounting standards is a non for profit private sector. Their aim is to serve the public interests. With the growing globalisation of business and finance, it has stimulated a standardisation of accounting standards among countries. This measure aims to

Coming back to convergence, for the past several years the IASB and IASC before 2001, have been working to develop high quality, easy to understand, and practicable International Financial Reporting Standards to serve investors & creditors, around the world in globalized capital markets to make investment decisions. When IASB took over from the IASC in 2001, few countries back then had accepted and practiced International Accounting Standards. Everything changed with the

The phenomenon of globalization has interconnected the world at all levels. The accounting system standardization through IFRS adoption worldwide is one of the steps that countries and multinationals have to deal with.

Since 2005, the International Accounting Standards Board (IASB) have encouraged countries to adopt a set of accounting standards that is internationally recognised in order to improve transparency between users and providers of financial reports. The understandability and interpretation are also important factors behind the driving forces of implementing such a standard.

Auditing standards are published by the Public Company Accounting Oversight Board (PCAOB). As such, the PCAOB published Auditing Standard Number 5 (AS 5), which recommends integrating an audit of intern controls with the audit of a firm’s financial statements (PCAOBUS, 2007). An auditor’s objectives of the internal controls audit and that of the financial statements are not identical, and the auditor must perform the audits to achieve both objectives.

The King Report lays out the importance of internal auditors in the area of governance. Auditors need to be provided with guidance for the conduct of internal auditing and this guidance is provided by through the International Standards for the Professional Practice of Internal Auditing. The standards provide basic principles that represent the practice of internal auditing, provide a framework for performing audit activities, establish the basis for the evaluation of internal audit performance and lastly serve to improve organisational processes and operations. The standards are divided into attribute standards which describe the characteristics of the Internal Audit Activity and the Internal Auditor and performance standards which describe the Internal Audit Services. Standard 2100 refers to

For many years, countries have created their own accounting standards which was either rules based, principle based, tax oriented, business based, etc which as a result, made them all different. There eventually came a need for harmonization since the world was undergoing globalization. As we approached the late 1990’s, we saw two predominant standards which was GAAP and IFRS. It is now clear that the world is moving to a more

Globalization has completely changed how people do business with one another. With the help of advance technology, communication’s barriers between businesses across the globe have diminished significantly. There are also a lot of rules and regulations that applied to those businesses. International American corporations are now facing the challenge of converting from United States Generally Accepted Accounting Principles (US GAAP) to International Financial Reporting Standards (IFRS) in a near future.