The benefits of conceptual framework in constructing International Accounting Standards and the difficulties of a single framework for improvement of accounting standards. In 2001, International Accounting Standard Board (IASB) replaced International Accounting Standard Committee (IASC) in order to develop a high quality standard of accounting for use in the capital markets area and by other numbers of users. (Mary E. et.al, 2007). There were so many issues presented and discussed since then to achieve their main goal. However, without any guidance and framework, to create a new standard that is acceptable and relevant for all users of accounting are difficult. So, conceptual framework is basically was set up to assist the IASB by …show more content…
Meanwhile, the limitations of single framework in developing accounting standards that are applied in many countries also a profound issue that will be discussed based on some basis which are different interpretation of standards and also environmental factors within a particular country. Firstly, conceptual framework helps IAS to initiate a detailed definition that facilitates discussion of accounting issues. The objective of general purpose of financial reporting and qualitative characteristics of useful financial information are some chapters contained in conceptual framework that really significant for IAS. However, to conduct precise and relevant definitions of these issues so that it is acceptable among the accounting users and importantly the information can reflect the economic reality are very crucial. Fortunately, with the existent of conceptual framework, IASB can really determine an entity’s economic value based on required information in financial reporting of an entity that was underlined by conceptual framework. According to (B.Sutton, et. al, 2015), the objective of conceptual framework support the information that reflects the economic reality of
This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This
are the differences between nations. These alteration in Accounting Practices are results of specific environmental factors, which have shaped them. Therefore, one of the first problems with standardisation I conclude is that the result of the harmonisation process could neither be a copy of the Anglo-American Model nor one of the Continental-European Model. The Anglo-
Globalization is a fact of life in today’s worldwide economy. They are many barriers to achieving a true global market; one of these barriers has to do with accounting standards or the presentation of accounting information. Various users have diverse needs for financial information. Companies in different parts of the world had their own methods in preparing their financial statements. Trying to compare the accounting rules of these different companies would have been difficult. As a result, accounting bodies were created in order to standardize the accounting principles in order to avoid any difficulties in the future and make these methods comparable and uniform. As a
There are two distinct methods of accounting for finances in the business world. These two methods are the methods both prescribed by the U.S., which is known as the generally accepted accounting principles (GAAP), and that which is used by the international community known as international financial reporting standards (IFRS). GAAP is regulated by the financial accounting standards board (FASB) while IFRS is regulated by the international accounting standards board (IASB). These two methods are currently under a process which is known as convergence or harmonization so that the United States will eventually become integrated into the global community (Miller, S. E. 2009). This will cause financial statements to be more usable for more people across the globe as well as enhance citizens of the U.S.’s ability to perform business more efficiently internationally.
A Case Study Analysis on the Applications of Accounting Standards and the Conceptual Framework by a Reporting Entity
The accounting standards are the ideal and standardized practice of accounting which aims to harmonize the accounting language. However the use of different accounting frameworks in different countries creates confusion for users of financial statements. The World has become an economic village due to globalization, privatization and liberalization. All the emerging economies are
Nikhil Chandra Shil, ACMA (Corresponding Author) Department of Business Administration East West University 43, Mohakhali C/A, Dhaka – 1212, Bangladesh Tel: 9887989(Off.) ext 253, 01819289589 (M) Dr. Bhagaban Das P.G. Department of Business Management, Fakir Mohan University P. O.: Balasore, Pin.: 756019, Orissa, India E-mail: bhagaban_fm@yahoo.com Alok Kumar Pramanik Department of Commerce, Bhatter College P. O.: Dantan, Pin. : 721426, Paschim Medinipur, West Bengal, India E-mail: alokdantan@sify.com Abstract The journey to have a common set of accounting standards started long before to give it a professional shape and
For decades, countries have designed their individual accounting standards principle-based, rules-based, tax-oriented, or business-oriented. Globalization has led to the greater needs with regards to harmonizing the standards (Kimmel, 2013). By late 1990’s the dominant standards were the IFRS (International Financial Reporting Standards) and U.S. GAAP (Generally Accepted Accounting Principles). Thus, both the standard setters namely; FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) launched a convergence project prior to the IFRS being essentially adopted by several countries. Measures are being taken to reduce likely impacts the frameworks would have on financial statement and reduction of last minute changes (Kimmel, 2013).
Understanding the foundation to activities embraced by the International Accounting Standards boards and other standard setting bodies to execute the reception of a uniform arrangement of accounting standards for around the world know as IFRS.
The Conceptual Framework adopts financial reporting as issued by the Financial Accounting Standards Board (FASB) of USA. The standards were placed in
Firstly, the purpose and role of the conceptual framework is a set of tools used to assist the IASB in developing and revising existing IFRS in order to adapt to various situation.(Brower.A,2015). Moreover it also has to promote harmonisation of regulation, accounting standard and procedures relating to presentation of financial statement in order to reduce the number of alternative accounting treatments. Additional other than helping the IASB it also have to inform interest party of the IASB with information about how it works and the formulation of
A Conceptual Framework can be defined as a system of concepts and purposes that guide to the creation of a constant set of regulations and standards. Especially in accounting, the rule and standards set by the nature, function and limit of financial accounting and financial statements. The purpose of the Conceptual framework is to enhance financial reporting and objective of accounting by offering a more accomplish, clear and updated set of concepts or guidelines. In Conceptual Framework, it will form a basis for define how transactions should be calculated (historical value or market value) and reported in financial report like how they are presented or communicated to internal or external users. To carry out this, the International Accounting Standards Board (IASB) is establishing on the currently existing Conceptual Framework updating it, enhancing it and padding it in the disparity instead of essentially reconsidering all respects of the Conceptual Framework. Conceptual Framework helps the International Accounting Standards
This paper follows the previous papers showing that there are needs for harmonization across the globe in order for accounting standards to not be affected in a negative way. The best way to make this happen is by adopting the same set of standards across the globe and stick by them. This paper will show how the adoption of these standards will benefit countries globally by using the United States alone as an example. As a matter of fact, the effects on U.S. reporting practices are likely to be limited. Nonetheless, there could be a significant impact accounting reporting processes and systems. Therefore our focus will be on the costs to implement the solution. The major out-of-pocket costs will probably occur during the transition phase,
guidance” (SFAC 8). In other words, the SFAC attempt to organize a framework that can
The modern business environment has evolved considerably during the past 10 years. Business technology tools have advanced up to levels which were practically impossible before. Today, Accounting is called “the language of business” because it is the source where all financial information comes from. However, Accounting is based on certain rules which all accountants must adhere. These rules are based on the Accounting standards and Accounting concepts. They form the framework and are the guidelines for good accounting practices.