Explain the Consequences of Differences in Accounting Standards

Having different accounting systems creates inconsistency in financial reporting. What are accounting standards.

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They do so by standardizing accounting policies and principles of a nation economy.

. Some of the differences in accounting that exist across countries can be categorized in the following manner. The common theme of these practices is that they. It would reduce the time effort and expense of preparing multiple reports.

Convergence in some form has been taking place for several decades and efforts today include projects that aim to reduce the differences between accounting standards. Cultural differences influence accountants judgment when interpreting and applying accounting standards which can result in different financial reporting outcomes. Consequences of Bad Ethical Accounting Practices.

Key Takeaways GAAP or Generally Accepted Accounting Principles comprise an established set of standards applicable to a specific jurisdiction. Moreover in recent years a supra-national body the International Accounting Standards Board IASB has become more important in setting those standards. An accounting standard is a set of practices and policies used to systematize bookkeeping and other accounting functions across firms and over time.

In their widest context you will encounter accounting standards at all levels of a business. Unethical accounting practices motivated by bonus incentives pressure to obtain financing or a desire to appear successful are not always illegal but they almost always have an adverse effect on your business. The convergence of accounting standards refers to the goal of establishing a single set of accounting standards that will be used internationally.

Coordination of different accounting standards and policies that are the basis for financial reporting. GAAP is incredibly clear and specific about how things must be done in order to maintain accuracy and consistency. This also includes disclosures required by.

Their main aim is to ensure transparency reliability consistency and comparability of the financial statements. Globalization of capital markets requires a unified global accounting reporting and disclosure set of standards. This project is aimed at determining the impact of Accounting standard on the users of financial statement and also the needs of the Accounting standard.

Accounting Standards AS are basic policy documents. When the accounting standards are imposed on other nations it strips them the ability to establish different accounting standards that are unique to the situation. The project is a comprehensive study of the changes in Accounting standard the impact on financial statement with a study of Guinness Nigeria Plc Benin Branch Edo state.

At the international level International Accounting Standards Board IASB has been created to formulate and publish in the public interest basic standards to be observed in the presentation of audited accounts and financial statements and to promote their worldwide acceptance and observance. Difference between Conceptual frameworks and Accounting Standards Introduction Financial reports and statements are an important entity which helps in running businesses and financial activities in the world. The accounting profession has long recognised the need for a harmonised accountancy framework Harding 1999.

A disadvantage of using accounting standards involves the inflexible framework the accountant must comply with. Accounting standards vary in different countries. Unpicking this complexity involved studying the minutiae of national accounting standards because even a small difference in requirements could have a major impact on a companys reported financial performance and financial positionfor example a company may recognise profits under one set of national accounting standards and losses under another.

Accounting standards are often promulgated by non-governmental professional organisations and foundations. However there is a current move towards worldwide adoption of the International Financial Reporting Standards IFRS. It would be right to say that financial reports are a must and commerce is dependent on financial reporting.

All standards in accounting touch on the topic of fair representation that has to be met through reasonable estimates and judgment-call valuations. 11 Background of the Study. So the transactions of all companies will be recorded in a similar manner if they follow.

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. A standard is an agreed upon criteria of. Littleton defines standard as follows.

Situation or consequences of accounting standards a Comparison between two firms is possible if both of them maintain the same principle otherwise proper comparison is not possible. Although the mere use of the word reasonable often gives some room for different interpretations governing agencies tend to monitor subjective estimates closely. Differences in the financial statements included in an annual report.

Differences in the format used to present individual financial statements. Accounting Standards can be any form of statement which consists of rules and guidelines issued by the accounting institutions for the preparation of uniform and consistent financial statements. As a result of increasing volume of cross border capital flows and the growing number of foreign direct investments via mergers and acquisitions in the globalization era the need for the harmonization of different practices in.

Convergence is driven by several factors including. They are likely to start with standards of reporting and presentation within a company to ensure that the information gathered about the companys affairs meets the needs of the company and the information is consistent. Differences in the level of detail provided in the financial statements.

The profession undertook this initiative when it created the International Accounting Standards Committee IASC. Each company faces different experiences with working to consistently meet GAAP standards. In reforming German accounting standards numerous accounting options were deleted several accounting rules were transferred from IFRS to German GAAP with some.

The Board is heavily pressured by political lobbies from EU and USA. This can lead to comparability and consistency issues in financial reporting even with one set of uniform global financial reporting standards. The advantage to find here is an increase in transparency which would then allow for more accessible cross-border investments.

Accounting standards apply to the full breadth. Up to 10 cash back This study investigates whether the 2009 German Accounting Law Modernization Act has affected the reporting and accounting practices of German private firms. It would decrease the cost of capital while providing higher liquidity during each transaction.

Due to the two financial reporting.

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