for stock valuation there are 3 alternatives available. This way the whole accounting system becomes easy & easily understood by all. Accounting Standards help in establishing comparability and reliability features for financial statements. This enables users of financial information, such as investors, creditors and lenders, to make knowledgeable and reliable decisions.
For example, some of the FASB-fronted accounting provisions are conservative in that they require sales, profits and assets to be posted in values that are way below the alternative approaches they are required to eliminate.
The main aims of accounting standards are to bring uniformity & reliability in the whole accounting system. What Are the Best Tips for IFRS Accounting. As highlighted in Nicolas Pologeorgis’ The Impact of Combining the U.S. GAAP and IFRS, the goal of the Securities and Exchange Commission is “to consistently pursue the achievement of fair, liquid and efficient capital markets, thus providing investors with information that is accurate, timely, comparable, and reliable” (Pologeorgis). The U.S. Securities and Exchange Commission is a federal statutory institution responsible for monitoring and regulating capital markets. These standards are created & framed in accordance with prevailing laws. Licensing and enforcement is one of the barriers to harmonization of accounting standards. It implements FASB’s policy recommendations with particular regard to publicly traded companies. Paul Cole-Ingait is a professional accountant and financial advisor. The compliance costs associated with the transition to new accounting standards will inhibit the expansion and growth of many small businesses across America. Advantages & Disadvantages of Accounting Standards. If the international body lacks enforcement authority, there is no prosecutorial authority for breaking international laws. Another issue is the cost to corporations that only operate nationally. These standards make sure that all information presented is trustworthy that leads to correct decisions.
Business leaders need to take the time to understand the rules and regulations and develop practices that meet standards without huge costs. These standards are followed by accountants & companies in preparing & presenting financial statements. All these activities require large costs for bringing changes. However, if the international body does have prosecutorial authority over a U.S. citizen, there would arise jurisdictional and constitutional issues regarding the rights of an international body's rights to prosecute an American under international law. Whether or not the benefits of harmonization truly outweigh the costs will be the ultimate factor in the decision.
Accounting Standards simply refers to guidelines to be followed in the accounting system. The purpose of this report will be to explain the concept of harmonization and to highlight the advantages and disadvantages it will have on the corporate world. Corporations would also have to invest time and resources in the re-education process.
FASB and SEC provisions lead to understatement and overstatement of some information in financial statements. Auditor can easily assure the fairness of account by checking out whether all policies provided by accounting standards are followed or not. It prevents happening of any fraud by establishing certain norms & principles. eval(ez_write_tag([[300,250],'commercemates_com-large-mobile-banner-1','ezslot_6',172,'0','0'])); All companies after adopting these accounting standards follow the same manner of recording transactions. It becomes difficult for companies to decide which one is best for them. How Do Competitive Markets Function in a Market Economic System? What Are the Differences between IFRS and XBRL? When a corporation operates only within its own borders, national GAAP is an appropriate guide for financial reporting. There is little incentive in the US and countries such as Canada to adopt what some consider to be a lesser standard for the sake of global consistency. This set of standards is designed to replace each country's national Generally Accepted Accounting Principals (GAAP) so financial statements from any corporation around the world can be evaluated based on the same set of accounting tenets. Accountants, management employees, and investors will have to educate themselves on the new accounting information, which will be costly to many corporations. Accounting standard does not clearly state that which one is the appropriate choice. Other significant disadvantages of IFRS concern the cost of implementation. Another drawback of Accounting standards is that it is time-consuming. Another hurdle of harmonizing accounting standards will be the unwillingness of countries to commit to a uniform code as many of them have different political, economical, and ethical systems. Is Ron Mead's Probate Investing Course Any Good?
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