...International Financial Reporting Standards The application of IFRS is spreading all over the world as a result of the development of world economy and increasing transactions among countries and nations. For many years, even now, different countries have different account standards, such as U.S. GAAP, Japan GAAP, and IFRS are mainly adopted by European countries. In recent years, many countries accepted or acknowledged standards used in other countries. In America, for example, the SEC issued that it is possible to adopt IFRS in November 2008 and SEC stated that IFRS is the high quality global accounting standards in February 2010. IFRS, short for International Financial Reporting Standards, are the principles developed by the International Accounting Standards Board (IASB). Nowadays, “it is becoming the global standard for the preparation of public company financial statements.”(Ervin Black) Parts of standards of IFRS are based on International Accounting Standards published by the Board of the International Accounting Standards Committee between 1973 and 2003. “On April 1st, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs. The IASB has continued to develop standards calling the new standards IFRS.”(Geoffrey Whittington) U.S. GAAP, short for the Generally Accepted Accounting Principles, is more widely accepted in United States...
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...International Financial Reporting Standards vs. Generally Accepted Accounting Principals Over the last decade, the world has become increasingly connected. Businesses are embracing opportunities abroad and gathering investors from a progressively growing international market. Globalization has given rise to a number of questions regarding multicultural business practice. It has also created a need for universal financial reporting that is consistent and useful to all of its users, international and domestic alike. Due to this growing concern, the International Accounting Standards Board was established and has created a code of standards to facilitate such financial reporting. IFRS is an acronym for International Financial Reporting Standards. IFRS are a set of accounting standards that will establish a uniform financial statement accounting standard across the world (AICPA, “What is IFRS”). These standards will create a consistency among financial statements, and will allow external uses better comparability from one entity to another, regardless of the entity’s country of origin. IFRS was developed by the International Accounting Standards Board, IASB, a London based organization established in 2001. The AICPA was a founder member of this board, and, while not in direct affiliation thereof, has established a website to educate individuals and businesses on IFRS (AICPA, “What is the IASB”). The cost of the United States converting to IFRS is under scrutiny, many believe...
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...International financial reporting standards and India’s response “International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.” TABLE OF CONTENT 1. Introduction 2. Objectives of financial statements 3. IFSR and India’s response 4. GAAP 5. Certain clarifications on IFRS roadmap 6. TransitionIFRS methodology Page | 2 1. International Financial Reporting Standards International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. IFRS began as an attempt to harmonies accounting across the European Union but the value of harmonization quickly made the concept attractive around the world. They are sometimes still called by the original name of International Accounting Standards (IAS). IAS was issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted...
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...Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2011 The Effect of Culture on the Implementation of International Financial Reporting Standards Mitchell A. Skotarczyk Claremont McKenna College Recommended Citation Skotarczyk, Mitchell A., "The Effect of Culture on the Implementation of International Financial Reporting Standards" (2011). CMC Senior Theses. Paper 165. http://scholarship.claremont.edu/cmc_theses/165 This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact scholarship@cuc.claremont.edu. CLAREMONT McKENNA COLLEGE THE EFFECT OF CULTURE ON THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS SUBMITTED TO PROFESSOR MARC MASSOUD AND DEAN GREGORY HESS BY MITCHELL SKOTARCZYK FOR SENIOR THESIS SPRING 2011 2 Table of Contents I. Introduction…………………….……………………………………………………………….4 II. Literature Summary………………………………………...………………...….……………..5 III. IFRS……………………...……………………………………………………..……………11 IV. Carve-outs…………………………………………………………………………………....18 V. Culture and Accounting………………………………………………………………………25 VI. Conclusion………………………………………………………………...…………………30 Appendix………………………………………………………………………………………...32 Bibliography……………………………………………………………………………………..37 3 I. Introduction As globalization increases at a blistering pace, more...
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...International Financial Reporting Standards (IFRS) in Indian context Introduction Convergence with IFRS has gained momentum in recent years all over the World. 110+ countries including European Union, Australia, China, New Zealand, and Russia currently require or permit the use of IFRS. Apart from India, countries like Japan, Sri Lanka, Canada and Korea have also committed to adopt IFRS from 2011. United States of America has announced its intention to adopt IFRS from 2014 and it also permits foreign private filers in the U.S. Stock Exchanges to file IFRS complied Financial Statement, without requiring the presentation of reconciliation statement. In this scenario of globalisation, India cannot insulate itself from the developments taking place worldwide. In India, so far as the ICAI is concerned, its aim has always been to comply with the IFRS to the extent possible with the objective to formulate sound financial reporting standards. The ICAI, being a member of the International Federation of Accountants (IFAC), considers the IFRS and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business environment prevailing in India. The Preface to the Statements of Accounting Standards, issued by the ICAI, categorically recognises the same. Now, as the world globalizes, it has become imperative for India also to make a formal strategy for convergence with IFRS with the objective to harmonize with globally accepted accounting standards...
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...Summary and Research Question: Historically, each nation has developed and applied its own domestic accounting standards; however, globalisation and integration of capital markets result in capital which travels across global boundaries. This process reveals a need for single set of financial standards. At this point, International Financial Reporting Standards (IFRS) are developed by the International Accounting Standards Board (IASB). Even though many researches have been done within the context of the effects of IFRS adoption, those studies have not expounded the background of IFRS adoption systematically. That is why this thesis aims to understand why some economies, on the one hand, have instantly adopted IFRS standards; others, on the other hand, have not completely used, or have rejected it. Background (Literature Review) : According to accounting theory, disclosing relevant and timely information on financial reporting reduce information asymmetry(Sun and Soderstorm, 2007). In general, "A single set of international standards will enhance comparability of financial information and should make the allocation of capital across borders more efficient" (Tweedie, 2004) In considering the rise of IFRS, a positive trend towards IFRS could be stated among countries, whereas some countries have already has negative reaction to the IFRS (Armstrong et al, 2010). The expected benefits of IFRS through enhanced comparability, transparency and quality have been previously...
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...This article was downloaded by: [Library Services City University London] On: 26 July 2013, At: 08:32 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Accounting and Business Research Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rabr20 International Financial Reporting Standards (IFRS): pros and cons for investors Ray Ball a a University of Chicago Published online: 28 Feb 2012. To cite this article: Ray Ball (2006) International Financial Reporting Standards (IFRS): pros and cons for investors, Accounting and Business Research, 36:sup1, 5-27, DOI: 10.1080/00014788.2006.9730040 To link to this article: http://dx.doi.org/10.1080/00014788.2006.9730040 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information...
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...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 States allowed...
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...the International Financial Reporting Standards? Since 1936, accountants in the United States have been following a set of generally accepted guidelines, historically set by the American Institute of Certified Public Accountants, for their practices. These guidelines have come to be known as the Generally Accepted Accounting Principles, or GAAP. Since their creation, these principles have protected companies and investors from fraud, as accounting practices can sometimes be questionable. The GAAP holds companies accountable for their financial reporting activities and includes rules accountants must follow regarding recording transactions and preparing financial statements. Recently, there have been questions regarding the Generally Accepted Accounting Principles in the United States as opposed to the International Financial Recording Standards, or IFRS ; and whether or not the United States should adopt these new accounting standards. There are a number of pros and cons to the International Financial Recording Standards as well as the Generally Accepted Accounting Principles; however, I do not think that the United States should fully adopt the IFRS considering the history of the GAAP and the reason for the creation of its principles. As previously mentioned, the American Institute of Certified Public Accountants (AICPA) has been responsible for setting accounting standards. In 1973, the Financial Accounting Standards Board and the Governmental Accounting Standards Board...
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...Accounting Standards Board Paper Financial Accounting Standard Board (FASB) is a private, not-for-profit organization responsible for setting accounting standard for public companies in the United States. It was created in 1973 as a replacement for the Committee on Accounting (CAP) and the Accounting Principle Board (APB). Financial Accounting Standard Board mission is stated as “to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investor and other users of financial reports.” The International Accounting Standard Board (IASB) is an independent, privately funded accounting standard-setter based out of England. It replaces the International Accounting Standard Committee and was founded April 1, 2001. International Accounting Standard Board is responsible for development and publication of International Financial Reporting Standard (IFRS). The International Accounting Standard Board mission is to converged global accounting standard; develop a single set of high quality, understandable, and enforceable global accounting standards; provide high quality transparent and comparable information in financial statement and help the world’s capital market and other financial statement user make sound economic decision. Since more companies are doing business and seeking financing from outside their home countries, investors from other countries are now reading...
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...1. Introduction Accounting standards establish the rules for accounting in a country and prescribe what should be reported in a company’s financial statements in that territory. Their purpose is to ensure that consistent approaches of accounting are adopted nationally. They minimize the risk of material misstatement in accounts and help investors make decisions by ensuring they can get comparable information. Accounting standards, as laid down by a country’s law, are applicable to all companies registered within its territory. But in order to ensure the success, the regulating process must be established. In Bangladesh BFRS and BAS are used as the accounting and reporting standards for the companies. Companies are obliged to follow those standards and laws and some are free from such restrictions. In this assignment, a theoretical analysis has been made regarding the accounting regulation and standard setting process in Bangladesh. 2. Accounting Regulation in Bangladesh All the companies in Bangladesh (both public limited companies and private limited companies) are regulated by The Companies Act of 1994 that provides the basic requirements for the companies. It includes the requirements about financial reporting and accounting practices. But most importantly, this act is silent about either Bangladesh Accounting Standards (BAS) or International Accounting Standards (IAS),. description about the laws and regulations for different types of entities in Bangladesh has been...
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...trade. Investors can trade shares and securities worldwide. Entities are in a position to access the funds globally in the most advantageous markets. For this, investors from all over the world rely upon financial statements before taking decisions. They need to be convinced that the financial statements are true and fair and what they understand from the statements is what the person preparing them intends to convey. However, different countries adopt different accounting treatments and disclosure patterns with respect to the same economic event. This may create confusion among the users while interpreting the financial statements. Financial statements that are based on a single, universally accepted and used GAAP will enable the world to exchange financial information in a meaningful and trustworthy manner. This will accelerate the globalisation of finance. Adoption of IFRS worldwide and in India The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. Several countries have implemented IFRS and converged their national GAAP to IFRS. More than 100 countries throughout the world, including the 27 European Union member states, require or permit the use of International Financial Reporting Standards (IFRSs), developed by the IASB. The number of countries adopting IFRS is expected to increase to 150 by the end of 2011. Countries such as China and Canada have announced their intention to adopt IFRS...
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...Abstract This paper is intended to explain a joint venture referred to as the convergence project, between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (FASB, 2002). This paper will also provide a brief history of the relationships between the two boards, and the equivalents between IASB and FASB. Along with an explanation of how the Master of Science in Accountancy Program helps prepare students for a professional life, within the accounting vocation. Accounting Standards Boards Within each country, there are different types of governments who follow different sets of regulations and require different accounting standards. With the current growth of global commerce, companies conducting business abroad require more consideration in there accounting, versus a business who only conducts commerce in one country. Many countries do not have the same level of regulation boards as the United States, who follows the standard set of principles by FASB, because of the accounting reporting differences, it is extremely important for any global organization to use IASB for best financial practices on a global scale. However with such a high-demand for global commerce, following different sets and types of accounting regulations has caused confusion and has become cumbersome to the stakeholders involved in international commerce (FASB, 2003). National Regulatory Boards Local and state laws, plus a host of regulatory commissions...
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...Will there be one set of accounting standards in use throughout the world in the next five years? As American companies continue to expand their businesses abroad, the need for a single set of accounting standards is growing. Currently there are about 12,000 companies that are operating in more than 100 countries, each of which requires their financial statements to be reported under the same guidelines and standards. All of these countries abide by the International Financial Reporting Standards, making it easier for companies abroad to have financial cohesion. Unfortunately the United States has yet to adjust their financial standards, but many feel this necessary change is coming. Signs of a possible change arose when the SEC approved the use of International Financial Reporting Standards by non-U.S. registrants as long as they included reconciliation between the IFRS and the U.S. GAAP standards. Further signs of change arose when the SEC dropped this reconciliation requirement only a year after enacting it. As the SEC is noticing, the need for a uniform financial standard is not only growing but it is a necessary change as there is many advantages to having one set of accounting standards. One of these advantages is that having one global set of accounting standards will eliminate the costs of preparing multiple financial statements under various standards. Another advantage is that this will also reduce the need for multiple audit opinions that multinational firms...
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...Chinese accounting standards are the accounting rules used in mainland China， issued by Ministry of Finance People's Republic of China in 2006 regulates the presentation of financial statements and underlines the importance of financial reporting. As of February 2010, the Chinese accounting standard systems is composed of Basic Standard, 38 specific standards and application guidance. Although China's accounting standards have not called Financial Reporting Standards, however, the concept of International Financial Reporting Standards are consistent. This revised law marked a large step forward for the continuing integration of world trade and capital markets, with China adopting a significant number of the accounting standards laid out by the International Accounting Standards Board. The old Chinese Accounting Standards (CAS) were largely replaced by the International Financial Reporting Standards (IFRS), to bring China more in line with the rest of the world. The similarity between the new Chinese accounting standards and the IFRS is almost 90–95%. Accounting Standard prescribes the behavior of accounting recognition, measurement and reporting. Auditing Standards draw up the standard of financial statement audit and identification behavior. Under the guidance of "Enterprise Accounting Standards", the preparation and presentation of financial statements could be implemented. The basic concepts of financial reporting should include the main contents, should reflect the basic...
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