The Relationship Between Ias 37 And Principle Of Accounting Prudence

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

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An alternative to the precautionary principle is cost-benefit analysis. Using cost-benefit analysis, one compares the cost with the benefits. This is usually based on a common measure such as money. Sunstein introduces the concept of “cognitive cost-benefit analysis” (p. 129). This type of analysis does not depend on an economic analysis, but instead shows what may be at stake by making some regulatory decisions. Sunstein is not overly fond of this method

The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy

MC Wells ‘A Revolution in Accounting Thought’. The Accounting Review. V.LI. No.3. July 1976. pp471-82. The article does not have an abstract – write an abstract of no more than 400 words. A short guide to writing an abstract is provided. ----Answered by Wenxin

Fast forward to 1970, where the APB’s main contribution “Basic Concepts and Accounting Principles Underlying Financial Statement of Business Enterprises was highly critized for achieving too little too late. Ultimately, resulting in the AICPA suggesting that the standard setting role be turned over to an autonomous body known as the Financial Accounting Standards Board

In the IASB framework, prudence is defined in terms of a degree of caution. The need to be careful implies to allow a degree of caution and therefore to permit a degree of prudence, but prevent overuse of prudence. 'Any overuse of prudence results in a loss of transparency, which is why the ASB is right to be wary of it. When it is excessively or inconsistently applied, it can make obfuscation of results and trends possible' (Paterson,2002: 1). Trends in financial reporting act contrary

Being unfamiliar with accounting and accounting standards when I started my degree there were times when I was told, ‘this is just how it is’. Now, after taking several courses and knowing what I know, I have realized just how important it really is that we understand the concepts. This has been my same approach to Governmental Accounting Standards Board (GASB) Statement Number 34. I first learned what it is that Statement Number 34 required us to do and must now try to understand why it is that those requirements were included in the first place.

Limited access to records and assets can really make it hard for someone in an organization to commit fraud. If the accounting department never has access to the actual money and the people in charge of the money have no access to the accounting of the organization other than sending them the info over that the

Therefore, they require acceptance rather than mere adherence. The article presents individual principles which are applied to accounting: utilitarianism and deontological. Pros and cons of utilitarianism when applied to accounting, its influence in the business context in the sense that most economic and finance concepts are implicitly or explicitly built on the assumption that companies are interested in maximizing short-term self-interest. However, the accounting concepts are often presented as neutral or as morally correct, and accounting control has a moral quality (Preuss,

There are general rules and concepts that preside over the field of accounting. These general rules, known as basic accounting principles and guidelines, shape the groundwork on which more thorough, complex, and legalistic accounting rules are based. The Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a foundation for their own comprehensive and complete set of accounting rules and standards.

The requirements of IAS 38 in respect of Research and Development expenditure are theoretically dubious and practically unnecessary. All such expenditure should be treated as an expense in the Income Statement and its amount disclosed in notes to the accounts.

The accounting world is shaped by stringent and clear rules, principles, standards and guidelines. These are all meant to define accounting operations and reporting discipline. With the emergence of International Accounting Standards (IAS), which was later replaced by International Financial Reporting Standards (IFRS), the accounting concepts, analysis, disclosures, reporting and presentation became easier and practical. Currently, accountants, managers and related parties find it concrete and consistent in protecting professional boundaries.

First, The International Accounting Standards Board (IASB) issues The International Financial Reporting Standards (IFRS) on U.S securities and exchange companies listed.

The principles are the result from the accounting practice that has been used and improved over the time. The deeper explanation about the statement is that, accounting standard such as IFRS is created based on the previous accounting practice itself rather the theories. The theories are useful in guiding the other field like finance and economics. There is also evidence that the accounting theory exists after standard has been practiced (Cluskey, Ehlen and Rivers 2007). The father of accounting, Luca Pacioli explained about double-entry booking in one of his studies. The study described the practice and explained to the readers the logic behind it. The research had given birth to dozens of studies made by theorist to further discuss about the accounting practice. By this evidence, the readers can also conclude that not only the standard that exist from accounting practice but in fact, accounting theory also exist to explain the nature of the practice. Back to the purpose of this paper, accounting theory plays no role in the setting of accounting standard is approved by two points: the process of setting accounting standard itself is a political activity and the development of accounting standard is influence by the existing accounting practice not accounting