need for accounting standards

You can view samples of our professional work here. It is critical to have a standardized accounting; firstly the strategic decision making would be a lot more accurate and secondly increase in confidence. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. There have been numerous incidents that have occurred in the past decade that indicates the need of a universal standard. Needless to say that the International Accounting Standards Board (IASB) took the responsibility to set the various International Accounting Standards on 1st April 2001 from the IASC. It should not be treated as authoritative or accurate when considering investments or other financial products. The CPA Canada Handbook – Accounting provides you with the direction you need to ensure your accounting practices are current and reflect the standards.. You will receive. During formulation of accounting standards, the ASB considered the applicable laws, usages, customs and the business environment existing in our country. It is irrelevant whether we are practitioners or not.” Therefore, the Standards which are set/issued by ISAC are meant for universal acceptance. whether to use rules or principles based accounting standards Stakeholders in accounting include and are not limited to shareholders/investors in the company, regulators, lenders, customers and the accounting profession, just to mention a few. We are on schedule for convergence with IFRS from 2011. In short, IFRS are nothing but a set of accounting standards which are developed by the IASB. Content Guidelines 2. Contingencies and Events Occurring After Balance Sheet Date, 5. All work is written to order. The so-called financial information are communicated to the users (both internal as well as external) of accounting information by preparing and presenting the financial statements. Some believe that with the adoption of such a standard, this would assist in global economic stability. Financial Accounting Standards. VAT Registration No: 842417633. Objectives and Features 4. Do you have a 2:1 degree or higher? The Hon Minister for State, Ministry of Corporate Affairs, Mr. Salman Khursheed, had said that the min Indian is try had met its commitments of starting IFRS-Compliant reporting by 2011. Accordingly, new Indian Accounting Standards (Ind AS) have been introduced from April 2011. IFRS 1 First-time Adoption of International Financial Reporting Standards. *You can also browse our support articles here >. Plagiarism Prevention 4. It helps in dissemination of timely and useful financial information to all Stakeholders and users. The public relies heavily on this information to be consistent and accurate for … At present about 120 nations require IFRS for their domestic companies which are listed. General acceptance of IFRS will, no doubt help the investors as well as the other users of financial statements. worldwide acceptance and operation, the statement of). These standards are global standards in order to prepare the financial statement of public company. (Ind AS) 1: Presentation of Financial Statements, (Ind AS) 8: Accounting Policies, Changes in Accounting Estimates and Errors, (Ind AS) 10: Events after the Reporting Period, (Ind AS) 16: Property, Plant and Equipment, (Ind AS) 20: Accounting for Government Grants and Disclosure of Government Assistance, (Ind AS) 21: The Effect of Changes in Foreign Exchange Rates, (Ind AS) 27: Consolidated and Separate Financial Statements, (Ind AS) 29: Financial Reporting in Hyperinflationary Economics, (Ind AS) 32: Financial Instruments: Presentation, (Ind AS) 37: Provisions, Contingent Liabilities and Contingent Assets, (Ind AS) 39: Financial Instruments: Recognition and Measurement, (Ind AS) 101: First-Time Adoption of Indian Accounting Standards, (Ind AS) 105: Non-Current Assets held for Sale and Discontinued Operations, (Ind AS) 106: Exploration for and Evaluation of Minerals Resources, (Ind AS) 107: Financial Instruments: Disclosure. Bankers express how the FASB would limit the banks’ ability to manage risks as well as only certain financial assets and liabilities would be marked in the balance sheet. For example, if Firm A follows the FIFO method of valuation of stock whereas Firm B follows the LIFO method for valuing stock, the comparison between the two firms becomes useless. Of them, 90 countries have totally conformed with IFRS which are promulgated by IASB. Free resources to assist you with your university studies! As mentioned earlier, the banking industry opposes in having such a standard, however if we look at Dubai, United Arab Emirates, with the excessive borrowing and lending with International banks in construction projects, caused “Dubai World” to collapse, as a result it put Dubai in great debt, this is a classical example for the need of International Accounting Standards, where Investors are protected, with transparency that would allow investors to make an accurate decision. It is one important advantage of accounting standards. For this purpose ASB took the valued views and guidelines of various industrial houses, the Government, and other interested parties. Accounting Standards could differ, even within the same country if the International Standards are not enforced. (e) One accounting language may be applied in case of a foreign company having subsidiary to some other countries. Accounting profession should create a transparent as well as explicit rule that applies world wide. As such Indian listed companies are trying to achieve the important milestones while adopting various clauses of the regulations of IFRSs. In order to formalize their relationship, International Accounting Standards Committee (IASC) and International Federation of Accountants (IFAC) constituted a working group which has, in the meantime) issued a statement of ‘Mutual Commitments’. Some standards have been withdrawn and some were revised. nature of financial activities, financial position, financial results, present trend and further prospects etc.) Accounting standards sets the same rules & regulations for the treatment of accounting transactions. Accounting is the language of business. Similarly, the Financial Accounting Standards Board (FASB) of USA has recently issued a number of Statements on conceptual framework for financial accounting and reporting in order to develop the respective standards. The United States of America is also progressing towards IFRS. After reading this article you will learn about: 1. Accounting has existed for a number of years, since the time of the Islamic era, however Islamic accounting is strictly based on religion (Sharia system) and it is not based on geography. Presentation Standards. Before publishing your articles on this site, please read the following pages: 1. (Napier, C, 2009). If we merely look at accountings’ basic purpose of accounting standards, it is to facilitate the provision of financial information as well as, to give a clear picture to corporations’ investors of their cash inflow, assets, equity and liability , revenues and expenditures etc. Question 1 Critically evaluate the need for accounting standards and the need for a set of principles on which they are based. The European Securities Committee (ESC) needs ‘EU adopted IFRSs equivalence from those companies who are following, Third World Country. (b) IFRS helps to present its financial statement on the identical basis like its foreign competitors, i.e., comparisons become easy. Let us make an in-depth study of Accounting Standards. Formulation of Accounting … For this, the Government of India is firm on the transition of Indian Companies from GAAP to IFRS. (ii) To work for the improvement and harmonisation of regulating accounting standards and procedures relating to the presentation of financial statements. Development. Money is a big problem for many people all over the world. In view of the fact that several conferences and debates have been held as to whether the international accounting standards should be implemented world wide. According to him: “When we sit round the IASC Board table and in the steering committee which creates the standard, we do so in our capacity as experts in Accounting and certainly not as auditors. ASB will explain the basic concepts on which accounting principles should be oriented and will also explain the accounting principles on which the practice and procedures should conform while performing its functions. Looking for a flexible role? Indirect advantages to investors arise from improving the usefulness of financial statement information in contracting between firms and a variety of parties, notably lenders and managers (Watts, 1977; Watts and Zimmerman, 1986). Disclosure standards refer to the basic systematic set of guidelines for external reporting. Accounting standards are required to bring uniformity in accounting methods by proposing standard treatments to the accounting issue. Kali Prasad, 2006), In the summer of May 25, 2000, the US Securities and Exchange Commission suggested the acceptance of IAS for use in cross border. The Objectives of IAS is to develop accounting standards which are to be observed in the presentation of audited financial statements and to promote their worldwide acceptance. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Accounting for Investments in Associates in Consolidated Financial Statement, 27. Disclaimer 9. The need for this accounting evolution is not necessarily driven by the standards themselves, but by the fact that we continue to find new and often more complex ways of doing business. Practically, this statement, inter alia, accepts IASC as the sole body responsible for issuing pronouncements on international accounting standards. They are likely to start with standards of reporting and presentation within a company to ensure that the information gathered about the company’s affairs meets the needs of the company and the information is … (c) Subsidiary of a foreign company must use IFRS if its parent company follows the same. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! 2. In recent years, due to the growth of multinational corporations, certain international standards are required in order to avoid confusion relating to the financial status and operating results. The Institute of Chartered Accountants of India (ICAI) , to harmonize the diverse accounting policies and practices, constituted at Accounting Standard Board (ASB) on 21st April 1977. The Accounting Standards will, however, be issued under the guidance of the Council. Accounting is the language of business. L. Kirkparick, Chairman of the Board of IASC, delivered to the members of the Institute of Chartered Accountants, Ireland, is quite significant. Practically speaking, in order to avoid the variance which may arise between the accounting principles and accounting practice and also to find a uniformity among diversity among the various underlying principles of accounting. Study for free with our range of university lectures! 500 crores or less will adopt it in April 2014. Accounting Standards Accounting standards contain a set of rules and governing practices for the treatment of all financial transactions. An accounting standard is a common set of principles, standards, and procedures that define the basis of financial accounting policies and practices. In the course of this essay, the topic that will be discussed is the importance of having international accounting standards. It resulted in widespread of fears of losing public confidence and the need to strengthen internal controls. IFRS 16 (Leases) is also an important completely new standard on the horizon superseding IAS 17, with an effective date of January 1, 2019. IFRS 5: Non-Current Assets held for Sale and Discontinued Operations, IFRS 6: Exploration for and Evaluation of Mineral Resources, IFRS 7: Financial Instruments; Disclosures. Practically speaking, in order to avoid … The purpose of these standards is to ensure that the financial centers of the world, which have become more interconnected than ever, can use a global financial reporting framework that ensures effective regulation of financial markets. It includes companies having a Net worth of Rs. 1. The Council of IFAC has approved it on May 1981. Financial Instruments: Recognition and Measurement. At the end of this section, students should be able to meet the following objectives: Describe the purpose of accounting standards such as U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) and the benefits that these rules provide. International Financial Reporting Standards (IFRS) are practically principle-based standards interpre­tations and the framework which were adapted by the International Accounting Standard Boards. (Vass, P.1990). This essay will elaborate as well how certain industries reject the idea of having International Accounting Standards. Accounting standards are needed so the financial statements will fairly and consistently describe the financial performance of an organization (QuickMBA Accounting, 1997-2007). The Accounting Standards will, however, be issued under the guidance of the Council. Need of Accounting Standards:. IFRS 9 (Financial Instruments) and IFRS 15 (Revenue from Contracts with Customers) are completely new accounting standards superseding IAS 39 and IAS 11/18 and related interpretations with an effective date of January 1, 2018. However, this Council of the Institute of Chartered Accountants of India (ICAI) has issued 32 Accounting Standards (AS) so far. The body consists of the following members: Company Law Board, CBDT, Central Board of Excise and Customs, Controller General of Accounts, SEBI, Comptroller & Auditor General of India, UGC, Educational and Professional Institutions, Council of the Institute and representatives of Industry, Banks. Moreover, its other responsibility is to keep member bodies informed of the latest development and standards by issuing exposure drafts form time to time. For example, Mexico will adopt IFRSs to be standard from 2012 for all listed companies whereas Canada and Korea are expected to introduce by 2011. It may also be stated that accounting is the language of all other organisations. One school of thought believe that International Accounting Standards is committed in developing, the public interest, by setting a sole set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general financial statements. We're here to answer any questions you have about our services. No plagiarism, guaranteed! That is to now how can get at judgements and guidelines. It means that all … Thus, the principles which are formulated or developed in this regard and which are approved by the specialised bodies are known as “Accounting Standards.” Practically, it will help us to assess the progress or otherwise of a firm after comparing the actual performances with the standard. Small company thresholds will increase to companies with a turnover of £10.2m and up to 50 employees. Many countries have their respective plans to introduce IFRSs as early as possible. Company Registration No: 4964706. Accounting for the Effects of Changes in Foreign Exchange Rates—Revised, 23. For instance public and private sectors were seen to be different. Privacy Policy 8. For this purpose, they are shifting from US GAAP to accept IFRS. Our academic experts are ready and waiting to assist with any writing project you may have. (c) The Accounting Standards recognise the principle of equity applicable for different users of accounting information, viz. The need for International Accounting Standards is essential; however there are a lot of obstacles that needs to be addressed and put into consideration. The Institute of Chartered Accountants from 10 nations i.e., USA, Canada, UK and Ireland, Australia, France, Germany, Japan, Mexico and Netherlands) signed the constitution for its formation. (d) It helps the foreign investors who are using IFRS. The objectives of IASC which are set out in its revised agreement and constitution are: (i) To formulate and publish in the public interest Accounting Standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observation. The same is possible only when both of them follow identical method of valuing closing stock. In their widest context, you will encounter accounting standards at all levels of a business. (Beresford, Dennis R.1998). Having standards is essential; however currently there are different standards that are being practiced. But this variety of kind of business, a… Accounting criterions means the accounting regulation and means the criterion of linguistic communication as a theoretical account in accounting is intended to The Essential Guide "The Need For Accounting Standards Accounting Essay" These standards outline the accounting information that passes for presentation and the order. Practically, Accounting standards have been presented in order to maintain fairness, consistency and transparency in accounting practice which will satisfy the users of accounting. In these situations, the underlying economic and financial circumstances of a transaction may not have been considered by existing accounting standards. (Napier, C, 2009). Copyright 10. 1,000 crores, will adopt IFRS Standards in April 2011. As such, ASB has given the authority of propagating the Accounting Standards and instituting the parties to prepare and present the accounts on the basis of Accounting Standards. The Case for Principle-Based Accounting 1056 Words | 5 Pages. If we merely look at accountings' (Beresford, Dennis R.1998), Although such action and decision are taking place, the banking industry stands firm with their belief and disputes. At regional level, ‘International Cooperation in Accountancy’ was actually the theme of the Confederation of Asian and Pacific Accountants (CAPA) conference held in 1979 in recognition of the universality of accounting and the consolidation of efforts of accounting organisations throughout the world. Key areas of difference between FRS 102 and FRSSE include investment properties and financial instruments. It helps to provide a set of standard accounting policies, valuation norms and disclosure requirement. In addition, there must not be any ambiguity and uncertainty relating to the facts, figures and terms which are contained in the financial statements and will be presented to the users of accounting information. Another name of guidelines is Accounting Policies. These standards may be established by the Council of the Institute in India. For example, AS-6 (Revised) … Any information contained within this essay is intended for educational purposes only. The public sectors were concerned about services which met from taxes, as opposed to private sectors where they concentrated more in profit, sales and turnovers. Thus the purpose of setting Accounting Standards is nothing but to find a uniformity in accounting practice while formulating financial reports and make consistency and proper comparison of data which are contained in financial statements for the users of accounting information. The International Accounting Standards Board will continue to develop various needed standards which are popularly known as IFRS. Accounting Standards mainly deal with four major issues of accounting, namely. all European Union, Hong Kong, Australia Malaysia, Pakistan, Russia, South Africa, Singapore, Turkey etc.).

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