An assessment of the barriers and challenges to the institution of the International Accounting Standards Board's (IASB) internationalfinancialreportingstandards (IFRS) .
Abstract This research paper focuses on the International Accounting Standard Board's (IASB) internationalfinancialreportingstandards (IFRS) and the barriers and challenges that exist to adoption and implementation of these standards. The work conducts an extensive review of relevant academic and professional literature to identify these challenges and barriers and identifies the steps that are necessary to overcome these challenges.
Outline:
Objective of the Research
Questions of the Research
Methodology
Introduction
Literature Review
Summary and Conclusion
From the Paper "In a recent report Allen Blewitt, Chief Executive of the Association of Chartered Certified Accountants (ACCA) warned that "implementation of, and compliance with, International Financial Reporting Standards would be adversely impacted unless the standards were made less complex." Blewitt specifically stated while speaking at a conference in London that: "What I believe the IASB most urgently needs to address are the barriers to implementation. From talking to our members working in business around the world, it is clear that the length of the standards and complexity of the concepts represent a very real problem in many countries. The standards have been described to me as a major turn-off and disincentive for accountants in commerce and industry. People who initially qualified as accountants and are now principals and managing directors resent that they can no longer understand the accounts of the business that they helped to build. I am concerned that, despite the name of the project, the focus of IASB's considerations are going to be large unlisted entities. The overwhelming need for a new set of standards is not for these few companies but for the much larger numbers of genuine SMEs. If the IASB fails to satisfy this real and urgent demand that exists around the world, then some other body must step in and deal with the real problem."
Abstract This paper discusses ethical financialreporting and what organizations are involved in monitoring and regulating financial statements of public companies. This paper reports that in the United States, these rules are called Generally Accepted Accounting Principles (GAAP). Although they are not laws, the Securities and Exchange Commission requires public companies to follow them. The Financial Accounting Standards Board is the most important organization in setting Generally Accepted Accounting Principles. Although not part of GAAP, Statements of Financial Accounting Concepts provide the basis for Statements of Financial Accountant Standards, which are the most important GAAP-establishing publications.
From the Paper "The framework for corporate financial management has changed significantly over the past few decades as more corporations move away from a checks and balances systems towards more of a juggling act. Recent ethical scandals including the Bre-X, Enron, and Worldcom debacles, has translated into increased scrutiny of corporate financial reporting. Some financial analysts argue that a company's ethical standards affects profitability, and those businesses that demonstrate unethical behaviour will suffer from decreased market share and profit potential, as well as increased government regulation. Increased competition between businesses has forced corporate finance managers to juggle more than one set of balance sheets depending on whether the reporting is going to the Internal Revenue Service (IRS) or shareholders."
Abstract The paper relates that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have decided to revise their conceptual frameworks for financialreporting and accounting. The paper notes that, ideally, the present framework of both boards will be broader and expansive so as to develop a conceptual framework, which both Boards can use as an outline for new and revised accounting standards. The paper explains that one key area that is affected is the basis of measurement and its effect on financialreporting. The paper then proceeds to evaluate the different ways that measurement is defined within the conceptual framework. The paper also analyzes the methodologies identified so that choices made in the future can be based on valid recommendations.
Outline:
Introduction
Measurement and Bases of Measurement
Criticisms
Objectives of FinancialReporting and the Bases Choice: Is there a Trade-Off
What Bases Should be Chosen?
Conclusion
From the Paper "Measurement in financial reporting is therefore dependent on a lot of external factors to the organization; which affect the process of integrating it within the conceptual framework of the IASB/FASB. Bullen and Crook (2006) states that measurement will continue to be one of the most challenging aspects of the conceptual framework since neither bodies have a clear cut definition as to what are the necessary bases that should be used nor are there a set of refined guidelines for the use of any bases. The definitions of both bodies are vague, and as such the conceptual framework continues to produce a vague definition."
This paper explains that many factors, such as history, politics, differential currency types, ease of conversion and regulations of various international banking institutions, prevent full harmonization of internationalfinancialreporting.
Abstract This paper explains the history of the inter-relationship of political and economic changes that effect today's problem of harmonization of currency and reporting such as (1) competing economic policy objectives similar to today's problems with oil, (2) the Janus-faced nature of international capital flows and (3) the changing center of influence of the international system from the United Kingdom and toward the United States. The author points out that the new ISO engineering standards represent a model for standardizing accounting and reporting processes not only by solving the problems of harmonizing the accounting and reporting process but also by offering an open-ended approach, easily adaptable to even the smallest of enterprises. The paper stresses that this need for global standardization means that the mundane "bean-counters" of the past must be replace by today's global accountants trained in several disciplines.
Table of Contents
Thesis Statement
The Powerful Influence of History
The Gold Standard The Rise and Dilemmas of Bimetallism
The Development of the International Monetary Systems between WWI and WW II
The Bretton Woods System and its Problems
The Harmonization of the British Pound, U.S. Dollar and the European Common Currency
The Future Outlook from an ISO Point of View
From the Paper "Between the wars, the United States overtook Britain as the leading player in the commercial and the financial domains. However, America's foreign financial and commercial relations did not yet fit together in a way that produced a harmoniously working international system. Moreover, with even today's technological edge America is finding the attainment of harmonization a difficult task at best. Great Britain likewise struggles with several issues in this area. Hence, when postwar planners again contemplated the reconstruction of the international system, they sought a framework capable of accommodating these changed conditions. The solutions to the problems are not at all straightforward and thus the pronounced lack of harmonization of accounting and reporting."
Abstract The paper outlines the objectives of auditing, the auditor's opinion within the standard and how the "Auditing Standard ASA 200" of Australia conforms with the "InternationalStandard on Auditing". The paper lists the separate divisions of the "Auditing Standard ASA 200" and relates that the "Auditing Standard ASA 200" is for the most part, the same in the public and private sectors of Australia in terms of standards and requirements of auditing. The paper also identifies the internal controls that are expected by auditors to be present in the entities. The paper shows how the "Auditing Standard ASA 200" has undergone recent reform in 2006, and relates that this will very likely drive up the costs and expenses associated with auditing, however, it is not believed that these reforms will serve to boost the confidence of the public of financialreporting in Australia.
Outline:
Objective
Introduction
Terms and Definitions
Objectives of an Audit
Auditing Opinions on FinancialReporting Mapping of Auditing Standards in Australia
Mixed Economy
Standards Reform and Increasing of Audit Costs Explored
Summary and Conclusion
From the Paper "This case study conducts an examination of the Auditing Standard in Australia and specifically the 'Auditing Standard ASA 200' published in April 2006. The Auditing Standard ASA 200 is issued by the 'Auditing and Assurance Standards Board'. The purpose of the 'Auditing Standard' is to: (1) set out the objective of an audit of a financial report; (2) to require the auditor to comply with relevant ethical requirements relating to audit engagement; (3) to require the auditor to conduct an audit in accordance with Auditing Standards; (4) to require the auditor to comply with each of the Auditing Standards relevant to the audit in determining the audit procedures to be performed and to not represent compliance with Auditing Standards unless all of the Auditing Standards relevant to the audit have been complied with; (5) requires the auditor to, if possible, perform appropriate alternative audit procedures and to document certain matters where, in rare and exceptional circumstances, factors outside the auditor's control prevent the auditor from complying with an essential procedure contained within a relevant mandatory requirement."
Abstract This paper discusses whether or not Quaccess should move to adopt international accounting standards. It considers the role of financial statements and international implications. The author concludes that American firms should wait and see before moving toward adopting internationalstandards.
From the Paper "Accounting is sometimes referred to as the language of business. Financial statements and accounting pronouncements are used by stakeholders in organizations-shareholders employees creditors ..."
Tags: Quaccess, accounting standards, international accounting standards, financial statements, balance sheet, income statement, IAS, IFRS, FAR, internationalfinancialreportingstandards
This paper discusses the importance of financialreporting in the free market economies, the authoritative sources of accounting and the standard setting process.
Abstract This paper discusses and examines the standard setting organizations and process, as well as the authoritative sources of accounting. This study also covers the objectives of financialreporting and its role in today's economy, asserting that ethics will remain the cornerstone of the accounting profession.
Abstract
The Standard Setting Process
Standard Setting Process and Authoritative
Sources of Accounting Information
Objectives of FinancialReporting Ethics's Role in FinancialReporting Conclusion
From the Paper "The Standard Setting Process
The dawn of the new century brought an economic downturn. The tragic events of 9/11 and the burst of the dot.com bubble accelerated the general decline. Investors kept corporate managements under constant pressure to beat expectations related to metrics such as earnings per share or net income. The combination of market downturn and profit expectations led to the adoption of unethical or outright illegal practices. The high profile accounting scandals eroded investor confidence, which is the foundation of a free market society. The quality of financial reporting was questioned and the accounting standards were under scrutiny. Sarbanes-Oxley Act (SOX) was implemented in the wake of the collapse of Enron and WorldCom to restore investor confidence. The legislators aim was to promote transparency through consistent and accurate information to protect investors and deter corporate fraud. The following study will discuss the importance of financial reporting in the free market economies, the authoritative sources of accounting and the standard setting process."
Tags: accounting markets financing capital profits, financialreporting, corporate fraud
This paper explores the development of a conceptual framework for financialreporting and accounting by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB).
Abstract The paper explores if the proposed conceptual framework for financialreporting and accounting covers the main facets of the original framework of both the FASB and the IASB and whether the purpose of financialreporting is omitting a vital element. The paper further examines whether the decision-useful objective necessarily encompasses the stewardship objective. The paper concludes that it is necessary to have separate objectives related to stewardship and decision-usefulness.
Outline:
Introduction
FinancialReporting that is 'Decision-Usefulness'
Stewardship Objective
Should the Stewardship Objective be Included Separately?
From the Paper "The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have decided to revise their conceptual frameworks for financial reporting and accounting. Ideally, the present framework of both boards will be broader and expansive so as to develop a conceptual framework, which both Boards can use as an outline for new and revised accounting standards. This amalgamation is very important since markets become more international in scope, there is a need for global accounting standards that are consistent irrespective of the geographical boundaries. Also, 'there was a need to provide direction and structure to financial accounting and reporting' (Penman 2006)."
Abstract The paper discusses the many advantages of having one global set of accounting standards that would improve the quality of financialreports and investment decisions. The paper looks at the IAS or International Accounting Standards proposal that will determine one set of accounting standards. The paper concludes that if the United States were to impose a broad and ill-defined system of accounting standards, companies would challenge every standard, trying to define the system in their favor.
Outline:
Pros And Cons Of Having One Global Accounting Standard Preparers, Users and Regulators of the International Accounting Standards Types of Companies; Listed vs. Unlisted, Large v. Medium v. small, Domestic v. International, Public v. Private
Political Process of Standard Setting; Rules Based, Principal Based
Examples of Three Different Countries; Compare Their Accounting Practices
Conclusion
From the Paper "The new electronic interdependence recreates the world in the image of a global village." (McLuhan (1962 (1996, p. 31). There are many advantages of having one global set of accounting standards that will provide society with a crucial service not only in the United States, but in other countries as well. In recent years there has been shameful accounting methods used in which billions of dollars in retirement wealth and investments have had great financial losses. Because of these slanderous actions, the integrity and the ability to survive these accounting services have been questioned. Globalizing international trade by using a set of global accounting standards has had a tremendous effect in the way business is conducted. (Pagiavlas 1)"
Abstract The paper explains that internal control is defined as a process that ensures effective operations with reliable financialreporting in compliance with applicable laws and regulations. The paper discusses how the collapse of Baring PLC is a good example of failure of internal control. The paper describes how Nick Leeson, a trader in derivative trading, lost close to $1.7 billion in open ended derivative contracts established in the name of Baring PLC. The paper shows how a failure of internal control allowed him to run such huge losses without any checks over a period of 3 years. The paper emphasizes that poorly monitored or haphazardly developed internal controls may make the difference between the success or failure of any business.
From the Paper "The Internal Control is defined as a process that ensures effective operations with reliable financial reporting in compliance with applicable laws and regulations. An internal control system has to protect business's assets, encourage efficient operations, generate reliable accounting information and comply with company policy to make it difficult for a dishonest employee to commit fraud. [Lavery et al, 2000] estimate that U. S. businesses loose $400 billion due to fraud and theft by managers and employees each year."
Abstract This paper explains that the objectives of the FASB's conceptual framework are to identify the goals and purposes of financialreporting and their underlying fundamentals; however, it is more than two decades old and has fallen behind the times especially in the area of currency and scope. The author points out that, despite the best attempts by the FASB to provide frameworks and standards to regulate accounting practices, unethical management always seems to discover loopholes to make their accounting statements say whatever they want them to say. The paper states that principle-based standards help management work with auditors to exercise professional judgment in determining appropriate accounting; nonetheless, rules-based accounting does more to promote consistency and adherence to guidelines.
Table of Contents:
The Conceptual Framework Developed by the FASB
The Role and Ethical Considerations
Principles-Based Accounting vs. Rules-Based Accounting
From the Paper "Some believe the solution for preventing unethical accounting conduct is to regulate as many accounting translations as possible. While closing loopholes should certainly be an objective of standards setting bodies such as FASB, unethical people will always find a new and better way to behave unethically if their corporate culture allows or encourages unethical behavior or if people behaving unethically simply believe they will not be punished for their conduct. Increasingly, accountants need to be trained in ethics in addition to improving financial skills."
Tags: enron, loopholes, out-dated, guidelines, training
Abstract This paper is a strategic audit of American Airlines, using financialreports for 2001 for the AMR corporation. The paper examines the impact of 9/11. The paper deals with problem identification, sub-problem identification, internal and external strategic analysis, four alternatives to solve the problem and finally, selecting the most appropriate and creating an execution plan for the strategy chosen.
From the Paper "With the exception of a few carriers such as Southwest Airlines, many of America's airlines have been losing significant amounts of money. According to AMR, filing with the U.S. Securities and Exchange Commission in fiscal year ?, American Airlines parent company, AMR, reported a net loss of billions on total revenues of ? billion. AMR's net loss was ? percent meaning the airline lost ? cents for every dollar of revenue for the year."
Tags: Strategic Audit, American Airlines, AMR, SEC, 10-k, terrorist attack, 911, Southwest Airlines, Bankruptcy. financialreports for 2001, Problem identification, sub-problem identification, internal and external strategic analysis, SWOT analysis, 4 alternati
Abstract The paper compares the 19th century capital markets, whose stability resulted from the trust in the gold standard, with capital markets today, which provide the means to raise capital for all ventures. The paper notes that investments in the products available in the capital markets help generate funds and stabilize interest rates and are an indicator of the status of the economy. The paper further notes that, unlike the colonial past, the modern economies that are developing need special care regarding the effects of the capital on states labor. In comparison with the 19th century market which was good, the present international capital market is in chaos. The paper concludes that while the modern international capital markets has great problems, it is unique to the present, and cannot be compared to the economy that was based on a colonial world, although some economic features seem to be common in both
Outline:
Introduction
International Capital Market in the Nineteenth Century
Transition from the Old to the New
The Post War Economy and Globalization
International Capital Market - Analysis
Globalization and the International Capital Market
Comparison of both the Markets
Conclusion
From the Paper "During the depression of 1920 and the Second World War, the system collapsed. Post war activity was more in direct investment and the United States has emerged as a more powerful player. The post war scenario witnessed the entire capital surplus of the nineteenth and twentieth century evaporates. The capital market has come back to the operative state ever since 1972 and is growing to the state it was in the nineteenth century. The amount of capital flow in the globe in the nineteenth century shows that the market was well organized at that period. The capital market integration was also taking place within the countries that participated during the period. (O'Rourke H; Williamson, 1999) "The integration of capital markets is usually tested with an interest rate arbitrage model even though much different financial assets must be compared."
Abstract This paper discusses the purpose of the Financial Accounting Standards Board (FASB), which is to constantly monitor the condition of the financial accounting standards for their relevance to current market developments in order to foresee any probable problem areas and deliver secure functioning of companies, big and small investors and government as a whole. Specifically, the paper provides an explanation of FASB 128 and gives examples of its application.
Table of Contents:
Introduction
Explanation of FASB 128 and Examples of Application
From the Paper "Thus, the financial accounting standard 128 requires the company to clearly state all the facts they include in the arriving at the earnings per share and diluted earnings per share ratio which is further on must be reported in the company income statement and thus reveal relevant information to the investors probable and those already holding the company stock. In order to avoid any misunderstanding on the actual company financial information as the number of financial derivatives has increased greatly during the recent past, the standard requires the derivatives such as options, warrants, contingently issuable shares or employee performance measures which can be convertible into common stock, to be accounted for as common stock at the most profitable price for the investors, or the market value for the conversion."
Abstract This paper gives a background of the purpose and history of the Financial Accounting Standard Board, or the FASB. The FASB was founded with the primary goal of devising the Generally Accepted Accounting Principles in United States. The paper also defines the roles of the various organizations that fall under the umbrella of the FASB, such as the SEC and the PCAOB. The paper focuses additionally of the role of ethics in accounting, especially in relation to the Standards creating by the FASB.
Explain the FASB, SEC and PCAOB
Discuss the Relationship among the FASB, SEC, and PCAOB
Explain Basic Accounting Theories, Assumptions, and Principles
Evaluate the Role of Ethics in Accounting
From the Paper "To cater to the basic objectives the financial statement is required to be relevant, to be reliable, being comparable as well as being consistent. So as to accomplish its basic objectives the GAAP is required to base on four hypotheses such as Economic Entity Assumption-that assumes the isolation of business from its owners or other businesses; Going Concern Assumption-that assumes the long term operation of business; Monetary Unit Assumption that assumes a stable currency as the unit of record; Periodicity Assumption that assumes the periodical record-ability of the business operations enabling comparison between present and past performances. "
