Standard For Better Quality Accounting And Reporting

3767 Words16 Pages
Report Aim: Many companies are looking to adopt this standard for better quality accounting and reporting and so I will be looking into the issues with IFRS such as measurement and reporting of profit, implications of adopting IFRS, the reintroduction of the concept of prudence and other proposed changes to the conceptual framework. Conceptual Frame work: According to ACCA[2014], a conceptual frame work must “consider the theoretical and conceptual issues surrounding financial reporting and form a coherent and consistent foundation that will underpin the development of accounting standards”[ACCA, 2014]. This definition incorporates the IASB and FASB definition of conceptual framework. So in other words, conceptual framework forms the…show more content…
By means of conceptual framework, FASB is able to issue consistent useful standards. However FASB has been criticized for not having a formal post-implementation of standards for reviewing the effect of a newly issued accounting standard [Christine, 2011]. But the biggest criticism that the US standard setting board was more rules based and should take a more principles based approach which is more associated with IASB but it can also be said that FASB uses the principles to somewhat produce the rules for the preparers of accounting statement [Schipper 2003]. Enron Scandal The rule-based approach came into the firing line after the big scandal of Enron and WorldCom. Nelson [2003, p.91] suggested that rules can in some ways increase the accuracy which standard setters communicate their requirement and reduces the imprecision that lead to aggressive reporting but he also highlight rules can consequently lead to complexity and to structuring of transactions. In fact the case of Enron, WorldCom and Xerox are among the financial scandal that called for the review of US standard approached. Enron is a case that clearly shows that the rules-based standards are insufficient to prevent the scandal. Although Enron committed fraud, it is however more complex than that because they were staying within the accounting rules and regulations
Open Document