Int.Accounting
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As accountant students we should consider the importance of the accounting standards because these standards are the main rules that oversee existing accounting performance and used to resolve the suitable action of difficult transactions. From a long time, standards of accounting business have been as varied as worlds inhabitants. Every nation hardened to have its own accounting principles suitable in their country. But recently since lots of companies become global which are called MNE (multi-national enterprises), such different sets of standards sourced a big amount of revise and judgment matters for accountants & auditors; international companies such as Coca-Cola, Microsoft, IBM and others have to develop financial information in different ways they should set up and analyze financial reports in harmony by means of the set of accounting standards in their nation, besides in according with standards used for country in which the company is listed on exchanges. Its said that International financial set of standards could treat and lead to an easy and simple understanding of the financial statements all over the world. Yes, our surrounding world doesnt have an international speaking and communication language; however, the majority of us who live in this world do speak English language that facilitate to people conducting business globally.In the previous few years stirring the world for a particular unified set of accounting standard has been a development which has a fast impulsion.
In my first assignment I raised a recently debated question which is: which is better to have a unified set of accounting standards applied all over the world, or to have different sets for each country?
The answer for such question is a gray area that has no clear yesno answer but by discussing and comparing the benefits and challenges or disadvantages of having one set of accounting standards rather than the different sets that countries used to follow, I may come with a final opinion as a conclusion of my paper.
Nowadays, in case each country applies dissimilar set of financial principles, though global companies subsist in diverse countries, theres a difficulty in comparing how every company situates and performs since there is a main aspect in the comparison of the statement missing which is the consistency. Lacking of a united set of worldwide standards, will bring more complexity to companies, it would be difficult to compare their performance with other competitors because of additional funds and time. By global financial reporting standards companies and competitors are capable to evaluate with each other.
One of the good initiatives for a united set of financial accounting standards is the International Financial Reporting Standards (IFRS) which are a set of broadly applied international principles for financial reporting. IFRS are improved and preserved by the International Accounting Standards Board (IASB). This board is an independent, voluntary and non-profit, privately funded accounting association found in London. Throughout 2009 IASB was contained 15 members from nine diverse states. International Financial Reporting Standards (IFRS) are presently used in more than 120 countries worldwide, as well as European Union. European Union at the present necessitates business and commerce entities that are scheduled on the stock exchanges to apply their financial statements to match to the International Financial Reporting Standards (IFRS). Whereas it is obviously evident that there is a long-standing objective for the Securities and Exchange Commission and IASB to introduce a single set of financial reporting standards to all corporations.
All type of financial users like Auditors, Accountants and Analysts may discover life much simpler if all the Accounting Standards across countries were one set and there was no need to practice settlement statements between different sets of accounting standards. I believe its quite noticeable to anyone who have a look at a financial statement that a settlement didnt restore the sense and logical meaning of original accounts.
As a result of the fact that economy and markets are on a global level and not a domestic one. I think three vital grounds are there to call for one set of financial reporting standards. These grounds include: IFRS makes it easier to contrast and evaluate, it is internationally understood, and it helps international businesses to stay advanced and competitive in the globalization. More over to the below mentioned offered international standards benefits to contributors, which serve as an early pattern for future internationally in harmony and imposed standards.
Ethics
Countries rules that are related to business differ from one country to another. This might result in different sets of ethics among countries, therefore, the international accounting standards are set to define the code of ethics to be followed across different cultures. This set of standards should not be for the favor of any country over another and by which disputes get resolved.
Shareholder & investors Benefits
A worldwide set of standards for accounting and financial statements make international investment choices easier. Shareholder could in simple ways judge against the financial statements of companies following International Accounting Standards, or further international strategy. With no united set of standards comparisons become fewer consistent,