...------------------------------------------------- International Accounting Standards * Print * PDF * Cite * Comparable, transparent, and reliable financial information is fundamental for the smooth functioning of capital markets. In the global arena, the need for comparable standards of financial reporting has become paramount because of the dramatic growth in the number, reach, and size of multinational corporations, foreign direct investments, cross-border purchases and sales of securities, as well as the number of foreign securities listings on the stock exchanges. However, because of the social, economic, legal, and cultural differences among countries, the accounting standards and practices in different countries vary widely. The credibility of financial reports becomes questionable if similar transactions are accounted for differently in different countries. To improve the comparability of financial statements, harmonization of accounting standards is advocated. Harmonization strives to increase comparability between accounting principles by setting limits on the alternatives allowed for similar transactions. Harmonization differs from standardization in that the latter allows no room for alternatives even in cases where economic realities differ. The international accounting standards resulting from harmonization efforts create important benefits. Investors and analysts benefit from enhanced comparability of financial statements. Multinational...
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...……………………………9-10 Coursework Part 1: Harmonization of international accounting standards Every organization has their own accounting systems and standards. If every organization is preparing its financial reports in their own way, it is difficult for the users of accounting to use the financial reports. (Kirk, & Miller, 1986) Harmonization of international accounting standards as the trend for globalization in business becomes increasingly important for economic success, many issues arise through international business practices for corporations, governments, and investors. There are many potential advantages and disadvantages/challenges associated with harmonization of accounting standards. (John, 2013) Advantages 1) Reduced Reporting Costs Multinationals operating in countries with different accounting standards would incur high costs of preparing financial reports in accordance with each country’s accounting principles, then repeating the whole process for consolidation purposes. Harmonized accounting standards benefits multinational corporations because they can prepare one report rather than one for each country in which they operate. In addition, it enables a systematic review and evaluation of the performance of foreign subsidiaries and associates. (Mark, 2013) 2) Improving Comparability To achieve the comparability against domestic and international peers, harmonization of accounting standards is advocated. Harmonization strives to enhance comparability...
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...One day we don’t have to talk about the story of convergence between International Financial Reporting Standards (“IFRS”) and U.S. GAAP (“GAAP”). I believe that they will be fully converged someday in the future. It is generally assumed that, all standard setters would agree on a single, high-quality accounting standard and it can meet everyone’s need. However, there is also a long road to achieve this ultimate goal. Fortunately, the steps of convergence never stop. There are more than 100 countries are adopting or processing adopting IFRS, it has already become the most popular international accounting standard in the world. Early in 2002, the International Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) agreed that a common set of high quality, global accounting standards was priority of both Boards. Then, the Securities and Exchange Commission (“SEC”) proposed a Roadmap for the potential use of financial statements prepared in accordance with IFRS as issued by the IASB by U.S. issuers for purposes of their filings with the Commission in 2008 which can be seen as a milestone as the upcoming fully convergence. Although in May 2011, the SEC staff released a paper which describe a slower process of incorporating IFRS into the US financial reporting system, it doesn’t change the fact that the convergence still processing. And the SEC plays a role as a promoter. There is no doubt that the United States is only “Superpower” owning the...
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...Case 5: Adopting International Accounting Standards Intro to International Business – 1. Both business enterprises and investors can benefit from the adoption of international accounting standards because they do not have to worry about losing money due to different exchange rates. In regards to business ventures, it will help in the long run with a systematic way to compare prices. Although the process is held up slightly for United States entrepreneurs, the process is still great. According to an article published by the NYTimes, “American companies must use rules established by the Financial Accounting Standards Board, a group chosen by the S.E.C., and foreign companies that do not use international standards must reconcile their statements with the American rules before their securities can trade in American markets.” 2. Overstating a country wealth is one of the potentially negative risk associated with investing in a foreign country. A country could be worth 20 billion dollars according to their standards however, when invested in, it is only worth 10million American dollars. Such as when you are an internal user at a firm, you can easily access all correct financial data that is made available to investors and executives. External parties have to rely on information given to them by the company which could be falsified in regards to their financial statements. 3. The United States would cause revisions to the IASB accounting standards because they have general accepted...
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...1976 International Accounting Standards and Accounting Quality Mary E. Barth Wayne R. Landsman Mark H. Lang September 2007 RESEARCH PAPER SERIES http://ssrn.com/abstract=1029382 International Accounting Standards and Accounting Quality Mary E. Barth* Graduate School of Business Stanford University Wayne R. Landsman and Mark H. Lang Kenan-Flagler Business School University of North Carolina September 2007 Forthcoming, Journal of Accounting Research * Corresponding author: Graduate School of Business, Stanford University, 94305-5015, mbarth@stanford.edu. We appreciate helpful comments from Bill Beaver, Utpal Bhattacharya, Ole-Kristian Hope, Karl Lins, Doug Shackelford, Steve Young, Patricia Walters, T.J. Wong, Ray Ball (editor), an anonymous referee, and workshop participants at the Athens University of Economics and Business, Southern Methodist University, the 2005 Pennsylvania State University Accounting Research Conference, the 2005 Joint Journal of Accounting ResearchLondon Business School Conference on International Financial Reporting Standards, the 2006 New York University International Accounting Convergence and Capital Markets Integration Conference; research assistance of Yang Gui, Yaniv Konchitchki, and Christopher Williams; and funding from the Center for Finance and Accounting Research, Kenan-Flagler Business School. International Accounting Standards and Accounting Quality Abstract We examine whether application of International Accounting...
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...International Convergence of Accounting Standards Standardization is a common theme across many sectors as the world continues an ever developing push towards globalization. This globalization requires the economic integration of nations into an international economy. In order to achieve integration it was recognized that there needed to be a standardized accounting system for financial information to be exchanged and interpreted. Thus, a goal and a path were developed to obtain the International Convergence of Accounting Standards. To understand the International Convergence of Accounting Standards knowledge is needed of its meaning, the roles of the IASB and FASB, it's history, where the world is in its process, futures plans, its benefits, and what the International Convergence means for Accounting in the US. Meaning of International Convergence of Accounting Standards: The FASB believes that the goal of convergence is to establish an exclusive set of reputable, international accounting standards. Convergence allows for companies both domestic and internationally to use the same standards for financial reporting. The path needed to develop such standards involves the FASB and the IASB to facilitate their efforts to improve upon the U.S. generally accepted accounting principles and the International Financial Reporting Standards and eradicate the differences between the two. Description of IASB & FASB and their roles: The International Accounting Standards Board...
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...a process driven by international trade and investing to create a more unification among nations worldwide economically, politically, and socially, has expanded immensely in recent decades. Individuals argue that globalization has been around since the 15th century due to exploration of persons such as Christopher Columbus and Vasco da Gama; but it wasn’t until the late 19th and early 20th centuries that globalization began to steadily become more prevalent due to the advancement in transportation methods. Since then many other technological advancements, especially that of communication, have played pivotal roles in the movement towards globalization. Although this movement may seem appealing to a variety of entities and especially consumers due to the overall decrease in price of goods, for the most part; there are variety of negative implications associated with the movement as well. In this composition will be information pertaining the impact globalization with have on global accounting standards. Currently there are two sets of accounting standards to take into consideration for this transition in the United States. The first of which being International Financial Reporting Standards (IFRS). IFRS, a more “principle based” method used in over 110 countries including the countries part of the European Union, is monitored and regulated by the International Accounting Standards Board (IASB). The second being United States Generally Accepted Accounting Principles (GAAP)....
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...The Fair Presentation Requirements of International Accounting Standard 1 will Undermine the UK’s View of True and Fair During the last 20/30 years there has been an increase in trade and communication. It is easier for people to do business across the world as the new technology allows this to be possible. The problem with this is that different countries have different ways of accounting standards, and therefore there is a problem on how to account standards. Hence, during the last years the debate on whether to use Fair presentation or the True and fair View is becoming a major concern. Fair presentation and the true and fair concept may seem as a similar concept, however, they do differ as well. While the former is the concept for United States, the latter is used in the UK, EU, Singapore, Australia and New Zealand. The IASB job is to prepare a “high quality global accounting standard that requires transparent and comparable information in general purposes financial statements”. According to the International Accounting Standard Board (IASB) the fair presentation is the concept which should be used, while the UK’s company act believe it’s the true and fair view ( TFV). The latest version of International accounting standard (IAS1) was brought into action from July 1998. This adopted both concepts, and it “required fair presentation and disclosure of compliance with IAS and a limited true and fair view override if compliance is misleading” . Fair presentation comes...
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...CAPE COAST PLOYTECHNIC NAME: GABRIEL NMAI REG. NO: 021201226 COURSE: HND ACCOUNTANCY CLASS: ACCOUNTING 1B TITTLE: PRINCIPLES OF FINANCIAL ACCOUNTING ASSIGNMENT RESEARCH QUESTION EXAMINE THE PROVISIONS AND PRINCIPLES OF INTERNATIONAL ACCOUNTING STANDARD 1 (IAS 1) What is IAS 1? The International Accounting Standards Board (IASB) provides a conceptual framework for the preparation and presentation of financial statements. This currently consists of: 30 standards (IAS 1 – IAS 41) and 11 interpretations (SIC 7 – SIC 32). IAS-1: Presentation of Financial Statement Paragraph 7 of IAS -1 states that general purpose financial statements are those intended to meet the needs of users who are not in a position to demand reports that are tailored to their particular information needs. Paragraph10 of IAS -1 gives the complete list of these general purpose financial statements as follows: • A statement of financial position at the end of the period; • A statement of comprehensive income for the period; • A statement of changes in equity for the period; • A statement of cash flows for the period; • Notes, comprising a summary of significant accounting policies and other explanatory information; Elements of Financial Statements: According to the Paragraph 9 of IAS-1, the financial statements provide information about the following information about the entity’s : Assets Liabilities Equity Income and expenses Contribution by and distribution...
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...Analysis of United States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) This paper examined the relationship between United States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) and found merging both accounting standards into a worldwide standard is ideal for investors. Corporate financial statement requirements depend on location. The two accepted accounting standard systems are GAAP and IFRS. The differences between GAAP and IFRS are GAAP is rules-based and IFRS is principle-based. How can a worldwide accounting standard benefit the world economy? The answer depends on political will, culture, countries history, and business structure. Research indicated there are only slight differences between GAAP and IFRS. These slight differences must be explored further to predict the impact on companies, economic, and financial markets. GAAP and IFRS have to be reconciled as a worldwide accounting standard to efficiently allow investors to compare foreign companies. GAAP set the accounting standard for the United States since its inception in 1929. GAAP evolved over the last 60 years (Măciucă, Ursache, Moroşan, & Apetri, 2014). IFRS was established in 1973 (Smith, 2012). IFRS used GAAP as a source document for its standards, either to imitate, modify, or omit (Chevis, 2014). The European Union established IFRS as the standard in 2005 (Smith, 2012). In 2007, the United...
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...“Islamic Accounting : Their Position in International Standard Harmonization” Rendy Anggita Putra “Islamic Accounting : Their Position in International Standard Harmonization” 1. Abstract According to (Susela, 1999) said the development of accounting theories is are affected by several factors including political and economic interests of certain people or group in community. Therefore, it can be also called if the accounting is a significant tool to illustrate the interests and perspectives of the various stakeholders. Islamic industry of finance has obtained tremendous growth in last few years, both in number of assets that manage by industry and in the diversity of financial products. A global system that can rule the industry will become significantly important for the Islamic finance sector in order to meet the needs of continued growth (Vinnicombe, 2012). Harmonization of Shari’a accounting standards has continue to be made by the AAOIFI as it is also done by the International Accounting Standards Board (IASB) for conventional accounting harmonization. In its development, financial reporting in Islamic accounting adds some different additional reports than conventional accounting to accommodate the unique transactions of Islamic economics. In that regard, this paper have objective to explore the main important values of Shari’a accounting and reporting standards of Islamic Accounting and try to find the answers of Islamic accounting positions among the process...
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...EGYPTIAN ACCOUNTING STANDARDS (EASs) vs IFRSs History For Private Sector For Public Sector In 1985 • IASs were informally introduced to the Egyptian market by the representatives of the big 8 at that time. • Unified Accounting System (UAS) In 1992 • Issuance of law 95 for 1992 (Capital Market Law) imposing the use of IAS. • Unified Accounting System (UAS) In 1997 • The 20 standards drafted by ESAA were issued by Minister of Economy in compliance with IASs with 4 deviations * • The preface of EASs stated that any subject not dealt with in the EASs, IASs should be applied. • Later, 3 more standards were drafted by ESAA and issued by the minister with the withdrawal of 3 standards withdrawn by IASB. In 2005 • ESAA’s standards committee started a project to go in line with the international development. • The existing 19 EASs were revised. • The remaining 16 EASs were drafted. Present status • The 35 EASs were issued. They are in number equal to what is issued internationally up till 2006 through IAS series or IFRS series. • The new set of EASs are to be applied on Financial Statements started on or after 1 January 2007. * ESAA: Egyptian Society of Accountants and Auditors EGYPTIAN ACCOUNTING STANDARDS (EASs) vs IFRSs Summary of Egyptian Accounting Standards (EASs) vs IFRSs Property, plant and equipment Under IFRS, the use of historical cost or revalued amount is permitted. Frequent valuations of entire classes of assets are ...
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...system of accounting to be inefficient. 2.Venice’s commerce was driven by sea traffic. 3.The Genoese system was the first to imply that unlike items could be compared in terms of a common monetary unit. 4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s. 5.When hyperinflation exists, alternative systems to historical cost become necessary. 6. The International Accounting Standards Board, an international organization dedicated to the diversity of accounting standards worldwide. 7. One trend in European securities markets is consolidation. 8. The continental accounting system is closely linked to the tax collection system. 9. The first step into international business is usually the creation of a foreign subsidiary. 10. If a firm is not involved in international commercial transactions, knowledge of international business is unnecessary. Multiple Choice Learning Objective #1.1: Identify the key trends in the development of accounting through history 1. The Crusades were important in the development of accounting, because __a. the Arabs first developed double entry accounting, which was then adopted by the Italians. __b. the Christians needed double entry accounting to keep track of the relative profitability of the different Crusades. __c. the trade routes shifted the commercial center from Italy to Constantinople __d. none of the above. 2. The major Genoese influence on accounting was __a...
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...non-assurance services including accounting, auditing, tax, and consulting. It is ranked among the top 100 CPA firms in the United States and consistently ranks among the top five in the state of California. The Big-4 firm our group has chosen is KPMG. Founded in 1987 with the merger of KMG and Peat Marwick, KPMG also provides auditing, tax, and advisory services. This International network of CPA firms employees 138,000 professionals in over 150 countries, and with annual revenues exceeding $22.7 billion, has become one of the largest professional services networks in the world. From our examination of these sites we will provide a critical evaluation of each, as well as an accompanying comparative analysis. We will begin our assessment by evaluating what we collectively found to be positive characteristics of the Vavrinek, Trine, Day & Company website. The first thing we noticed is that the site has an appealing visual aesthetic. The various pages are organized, cohesive, and uncluttered, and the font size and page layout makes the information presented easily readable. We also appreciated the navigation functions and how easy it is for the user to find the information they are looking for very quickly. Another impressive characteristic is that the content provided in the site provides users with a clear representation of the services offered by the firm. When you click on one of the services links, for example the audit and accounting link, each of the different...
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...IFRS, International Financial Reporting Standards, are a set of accounting guidelines and standards just like the GAAP (American Institute of Certified Public Accountants, 2012). This is the first thing that Marie Claveau needs to understand, since the firms will be expecting people who can help in the adoption of the new international accounting standards. The standards were established by the international accounting standards board to become the globally accepted standards for use in the preparation of financial statements, in public companies. It is supposed to be a set of standards that can be used globally for the public companies, as well as private companies willing to use them as their accounting standards. Currently, it has been adopted in as many as 120 countries all over the world, with an aim of having an accounting standard that is uniform and easy for global accounting purposes (American Institute of Certified Public Accountants, 2012). Unlike each country having its own accounting standards, IFRS seeks to standardize accounting standards across the whole globe for easy comparison of accounts especially now when countries can no longer be independently sufficient economically (Securities of Exchange Commission, 2011). Thus, having an accounting standard accepted globally makes it easy for large companies and corporations to have an easy time and efficient accounting policies within all its global subsidiaries. Considering that, these firms will be engaged in the...
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