The Framework Of International Financial Reporting Standards

Regulatory bodies are set up because there are laws and they ensure legislation is implemented. Some of the most prominent regulatory bodies would be OFSTED, Office for Fair Trading, Food Standards Agency, Advertising Standards, Financial Conduct Authority, Civil Aviation Authority, and General Medical Council.

Even if uniformity were to be reached, the IOSCO disclosure standards do not encircle all of the information required of an easy access to cross-border capital markets.

Establishment of a single financial reporting standard with full universal acceptance is unattainable on various levels. Due to the prevailing economic, political, and cultural environments, it is unconvincing and irrational to have a uniform set of global financial reporting standards. There are controversies regarding the different types of economic systems used worldwide, centralizing the major difference in the systems to be the governmental role and influence on market activity. For there to be a proper measure in comparability in financial statements there is an intrinsic need for a correlated set of economic activities along with an equivalent accounting system. If the US were to adopt IFRS there is a questionable level to the amount of comparison we can recognize for nations under different economic systems. Applying this even further, accounting under a new universal regulation will have economic consequences; changes to regulation will inevitably lead to changes to a nation’s economy. With that said, IFRS is currently not compatible with US corporate governance.

‘US GAAP’ is the term used to indicate the body of authoritative literature that comprises accounting and reporting standards in the US. Rules and interpretative releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.

The adoption of International Financial Reporting Standards [IFRSs] around the world has motivated empirical research that examines the effects it has on the accounting information. There is a visible contrast in these studies due to the use of various elements such as difference of researched countries, analysis periods, distinctive research design and reporting heterogeneous findings. Besides, there is also limited evidence of how the mandatory IFRS adoption affected the financial statements. Hence, this study provides comparative findings on the impact of IFRS adoption on the value relevance of reported accounting information in the UK.

There are several parts of accounting that help make corporations flow smoothly and efficiently. Accounting can be used by anyone in his or her everyday life whether balancing your checkbook or checking on your income statement. In accounting there are several rules, standards, and procedures one must follow in order to maintain fairness and legitimacy. This being said there are two main frameworks that make that possible which are referred to as GAAP and IFRS. GAAP stands for Generally Accepted Accounting Principles, which refers to the accounting standards guidelines and structure for typical accounting used in the United States. IFRS stands for International Financial Reporting Standards, which is a more principle, based accounting

Complexity in financial reporting is apparent especially when applying it to relevant accounting theories. "Complexity is ' 'the state of being difficult to understand and apply ' ' (SEC 2008, cited in Petersen, 2012). When we apply complexity to accounting we think of it in terms of applying it to accounting transactions which flow onto financial statements and how these were developed from the Accounting Standards. (Peterson, 2012, p.73).

Companies issue share in the primary market through an initial public offering (IPO) in order to raise capital. The estimated value of the companies and number of shares issued determine the price of shares. Companies obtain the money from IPO and no longer receive any money in further trading activity while the shares will be traded in stock exchange market or secondary market. Investors buy shares from one another at the agreed price. As the price of shares continue to change, investors try to predict the price movement to gain some profit from the rise and fall of share price. Companies also pay dividend to shareholders. Buying a stock, investors partially obtain ownership of the particular company. Therefore, they will receive the share of companies’ profit in the form of dividend (Christiansen & Koldertsova, 2009).

The objective of this paper is to deliberate the concerns regarding implementing International Financial Reporting Standards in United States. There is no scope that IFRS standards would be fully implemented in the United States. The main reasons are two regulatory bodies Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) are unable to integrate on the concept of convergence. Due to current economic conditions, FASB and IASB came together to reduce the differences between U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). Furthermore, Security and Exchange Commission has

The (IASB) International Accounting Standards Board published International Financial Reporting Standard 8 (IFRS 8) Operating Segments on 30 November 2006. The standard superseded IAS 14 Segment Reporting, which was applicable pursuant to Regulation 1606/2002/EC (IAS Regulation).

Second, the use of familiar accounting standards can increase foreign investors’ confidence in their ability to assess the foreign market and thus can lead them to invest more in the market (Amiram, 58-59). Business is now also much more complex than it was in earlier times. Contractual relationships are more complicated, and the financial instruments that companies issue to raise capital and hedge risks are far more sophisticated than the comparatively simple loans and stock shares that were issued and traded in preceding decades (IFRS). In its website the documents titled “Global Capital Markets and the Global Economy” IFRS mentions that these changes in economic and business activity are having and will continue to have major implications for the kinds of information investors will need from corporate reports in the future:

This report will address the main features of the International Accounting Standards Board’s (IASB) Conceptual Framework (CF) by explaining the purpose and intent of these standards together with the structure of the framework. The important features of these standards will be highlighted, analysing of the significance of these and ultimately whether the CF has impacted on accounting practice.

The IASB Conceptual framework for Financial Reporting (the ‘Conceptual Framework’) with its accounting standards becomes important for the reason that the business is more complex, and there are various definitions of accounting information in different countries. In this essay, for the first part, it would be discussed whether the conceptual framework is beneficial or not to the development of International accounting standards with several examples. For the second part, it would be also examined that IASB framework with its accounting standards is developed from country to country, and there are differences which have also been caused by a variety of economic, cultural as well as linguistic circumstances.

The International Financial Reporting Standards, or IFRS, are a set of standards designed to keep accounts comparable internationally. They are increasingly important as we move towards a global economy and with the increasing number of international companies. The United States, however, typically uses a different set of accounting standards. These are called the Generally Accepted Accounting Principles, or GAAP. The SEC has displayed interest in switching to the international standards recently, however. “In November 2008, the SEC proposed a road map that, if several milestones are achieved, could lead to a mandated use of IFRS for domestic listed companies in 2014. These actions of the SEC highlight the dedication of the U.S. to

IFRS rules does not exempt cash flow statements in any kind of situations; whereas according to GAAP under some circumstances exemptions of cash flow statements are limited for certain investments and entities.