The Standards Of The Standard Setting Board Essay

The Standards Of The Standard Setting Board Essay

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With financial standards being somewhat confusing for certain companies to adapt to, it can prove problematic for these standards to become uniform. Ball (2006) claims that “The notion that uniform standards alone will produce uniform financial reporting seems naïve”. The reasons against the adoption of these standards, whether they are localised or globalised, are that some countries, or companies, may ‘symbolically comply’ to these standards, essentially complying to these standards on paper, whereas their practical standards do not change. Secondly, the implementation of these standards, again whether they are the International Financial Reporting Standards (IFRS) or Domestic Reporting Standards (DRS), would require a non-bias regulator or mediator to ensure that these standards are implemented correctly, and to resolve any issues that may arise from then; which in turn could lead to political issues,. Another fault with the worldwide reporting standards would be that the standard setting board (IASB) requires funding, from international firms, so with this funding an issue arises of a nation increasing funding to induce an influence in the IASB decision making.
However, many countries still have adopted uniform reporting standards, and the reasons as to why they have done so can be generally summarised into three reasons; the net economical value of reporting standards; the net political value of reporting standards and finally; synchronisation of reporting standards, which all we be further explained.

WHAT ARE UNIFORM REPORTING STANDARDS, AND WHY IMPLEMENT THEM?
Accounting reporting standards typically come in two different forms; International Financial Reporting Standards (IFRS), a set of accounting standards created by ...


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...n rule-based and principles-based standards of accounting” (Sunder 2009). There is therefore an attraction for fewer, but more general standards that leave implementation up to interpretation.

CONCLUSION
Although it appears that there is a very high potential if all nations were to adopt uniform reporting standards, there is still going to be a lot of discord between companies in worse economic environments, and companies within good economic environments. And though it seems that the net political value, net economic value and synchronisation value would all be very valid reasons, as given with Germany, Kenya and Turkey, there will never be a full harmonisation, allowing there to be uniform reporting standards. This therefore holds true with Ball’s initial statement that “the notion that uniform standards alone will produce uniform financial reporting seems naïve”.

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