Essay on Benefits of Having International Accounting Standards

Essay on Benefits of Having International Accounting Standards

Length: 752 words (2.1 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

The purpose of this essay is to discuss the benefits of having international standards, reasons for national differences and difficulties in gaining agreement for standards. There are many benefits of having international standards. Firstly, this essay will only look at 4 benefits, which are comparability, credibility, principles and discipline. Secondly, this essay will state three national differences and evaluate their difficulties in gaining agreement. Finally a conclusion.

Comparability is an accounting principle. The fundamental accounting reports need to be reliable; if they are not reliable it is not comparable. If the company cannot make a comparison then the accounts come impaired. For example, the Financial Accounting Standards Board requires that expenses associated to research and development (R&D) should be expensed when incurred, but some companies expensed R&D when gained. While some other companies deferred it to the balance sheet and expensed them at a later date. Furthermore, the accounts have to be reliable and standardised so the investment decision makers can make valid inter-company comparison. To make this comparison meaningful accounts are prepared with guidelines laid down by the Financial Reporting Standards.

Credibility is linked with similar events, which produce similar results. If companies were doing a similar event in order to produce financial reports, which disclosed totally different results the company could lose their credibility, this is because companies can choose different accounting policies. It is important if financial statements disclose a true and fair view.

Discipline helps the protection of investors this is linked in with the monitoring board. The mandatory standard...

... middle of paper ... different meanings for words.

The tax system in France and Germany is different from the tax system in the UK and USA. In France and Germany their taxes are charged on the profit in the accounts, so the tax becomes accounting rules, whereas UK and USA tax rules and accounting rules are separate as this helps the user. For example, depreciation in France and Germany would be charged on the profit, this means whatever the tax rules say has to be shown in the accounts. A UK accountant will say that this does not show a true and fair view, even if it is legal to do so. However, depreciation in the UK will be charged separately from the profit. As depreciation can be deferred to the balance sheet and expensed at a later date.

The tax system makes it difficult to obtain international agreement because there can be a misinterpretation of different tax rules used.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The International Accounting Standards Committee Foundation

- Question one: outline the structure of the International Accounting Standards Committee Foundation (IASC Foundation). The purpose of this essay is to describe the structure of the IASC Foundation. The International Accounting Standards Board (IASB) is organised under an independent organisation called the IASC Foundation. IASC Foundation is a not-for-profit organisation who acts in the public’s interest. Components of the restructured IASB include the Monitoring Board, IASC Foundation, IASB, International Financial Reporting Interpretation Committee (IFRIC), Standards Advisory Council (SAC) and working groups....   [tags: Accounting]

Better Essays
2146 words (6.1 pages)

Essay about Improving Accounting Standards in Australia

- Introduction Intangible assets have become increasingly noticeable with accounting due to the larger amounts linked to patents, franchises and brands. Although these items are not purchasable they are generated within an organization and sometimes account for huge differences between market capitalization and book values. Over the years, the International Accounting Standards Board has focused on the uniformity of accounting standards. However, these standards will only be appreciated across the board if they are of unquestionable integrity....   [tags: Assets, Standards]

Better Essays
2624 words (7.5 pages)

Essay The International Accounting Standards Board

- Both the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are getting together to make one global standard. This standard will be applied globally to all accounting statements produced. There are many great benefits in having one accounting standard that can be applied globally. Although coming up with this global standard is a hard process since there are many things the Boards have to consider. The board have to consider the way the standard engages many governments, investors and companies while at the same time the involvement of other countries and their social development and culture which can be hard to an agreement....   [tags: International Financial Reporting Standards]

Better Essays
1090 words (3.1 pages)

Essay on The International Accounting Standards Board

- On April 1, 2001, the International Accounting Standards Board (IASB) was created to replace the International Accounting Standards Committee (IASC). One of the many roles that the IASB plays is the creation and issuance of International Financial Reporting Standards (IFRS). Defined, IFRS is the standards and interpretations set forth by the IASB and its predecessor IASC. Two of the most recent regulations set forth by IFRS after the Enron scandal are IFRS 10 and IFRS 12. IFRS 10 addresses the consolidation of financial statements by an entity when it controls one or more child companies or special entities....   [tags: International Financial Reporting Standards]

Better Essays
1252 words (3.6 pages)

Essay on Accounting and Financial Statements

- In this essay I am going to explain and identify external users of accounting information and give detail on the main characteristics and how these characteristics and the conceptual framework develop the benefits of financial statements for external users. Financial accounting includes information distributed to external users that are not part of the enterprise, e.g. stockholders, creditors, customers and suppliers, although the information is also of interest to the company's officers and managers....   [tags: Accounting / Finance]

Better Essays
1596 words (4.6 pages)

Ifrs And International Financial Reporting Standards Essay

- IFRS stands for International Financial Reporting Standards, which is a set of accounting standards that can be used globally by public companies for financial reporting. The set of standards are governed by the International Accounting Standards Board that is based in London. The purpose of converting the U.S to these standards is to streamline all the companies that are abroad and in the United States as far as financial reporting. This process is supposed to produce cost savings for companies that operate in the U.S....   [tags: International Financial Reporting Standards]

Better Essays
1091 words (3.1 pages)

Is The Accounting Boot Camp? Essay

- I recently graduated last year with a Bachelors of science in Health Service Management. Almost 99 percent of my course works were all related to health care. The only classes with a little math was my statistics class and my quantitative method class. Honestly speaking, I have never taking any accounting class except the accounting boot camp I took on the 15th of this month. I have not personally work on accounting reports, journalizing of accounting transactions, entering or reviewing source accounting data, and analyzing financial statements....   [tags: Generally Accepted Accounting Principles, Asset]

Better Essays
833 words (2.4 pages)

Disadvantages Of Having An Accountant Essay

- Disadvantages of Having an Accountant The following disadvantages to be discussed in this section are (1) cost and (2) liability. Cost. When establishing a small business and in the being phase of a startup company, money is tight. The company has yet to take shape but the need to generate growth is a huge concern. Cost is an incremental factor that deters the businesses owners’ decision to hire an accountant. Part of the costs involved in hiring an accountant includes their salary, benefits, and office space....   [tags: Business, Small business, Startup company]

Better Essays
1065 words (3 pages)

The International Ethics Standards Board For Accountants Essay

- Part B – Long Association with an Audit or Assurance Client This paper is a draft to investigate the familiarity threats to the independence of auditors created by using the same personnel on an engagement over a long period of time and the current audit partner rotation rules in New Zealand in contrast with the proposed changes to the long association rules in the exposure draft. 1. Current audit partner rotation rules in New Zealand and proposed changes to the long association rules in exposure draft....   [tags: Audit, Auditing, Financial audit, Ethics]

Better Essays
1029 words (2.9 pages)

The Global Economy Is Regulated By Two Main Accounting Systems Essay

- The global economy is regulated by two main accounting systems: (1) United States Generally Accepted Accounting Principles, also known as U.S. GAAP, and the (2) International Generally Accepted Accounting Principles, also known as iGAAP. As the abbreviations dictate, U.S. GAAP are the standards that regulate U.S. accounting procedures and iGAAP are standards that regulate international organizations. Both standards are alike with respect to language, procedures and reporting but there are enough key differences in reporting that it keeps a steady discussion on which standard is more suitable for and international accounting system....   [tags: Balance sheet]

Better Essays
792 words (2.3 pages)