Why Iasb Should Reopen Controversial Issues

The FASB should consider economic consequences in the standard setting process; “The Board cannot cease to be concerned about the cost-effectiveness of its standards. To do so would be a dereliction of its duty and a disservice to its constituents”. (SFAC No.2 P. 144) FASB member Victor H. Brown identified the economic costs to consider:

Financial reports consist of a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes, directors' declaration, directors' report and the auditor's report. The financial statements need to be prepared in accordance with applicable accounting standards, making the necessary disclosures in order to be transparent and fully inform readers about the activities and financial situation of the entity.

2. Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1? 
a. To provide information about how management of an enterprise has discharged its stewardship responsibility to owners.
B. To measure the current market value of the business enterprise.
c. To provide information so potential investors or creditors can make their own predictions of future

- Develop an understanding of the theory and rules underlying financial reporting - Enhancing ability to critically evaluate the effects and implications of accounting

The IASB and the FASB have both established frameworks for the reporting of financial information, however, despite their apparent similarities several key differences exist between their structures. For example, U.S. GAAP has been traditionally defined as being a more rules-based standard, which has established strict guidelines and contingencies for reporting financial information. Given its history and the recent tumultuous financial environment, particularly the 2008 financial crisis, U.S. GAAP has become a very robust and strictly enforced set of standards. This has given rise to concerns that some preparers of financial statements may commit accounting fraud by circumventing or manipulating the rules of U.S. GAAP. Supporters of IFRS argue that “the more detailed the guidance, the greater the opportunity to find the loopholes in the guidance” (Hillman, Heaston, and Dodd 5). Despite these concerns, however, U.S. GAAP continues to be the preferred standard of most accounting professionals. Conversely, IFRS is a principles-based standard. The principles-based approach of IFRS grants management the discretion to use different accounting methods when preparing financial data. While this practice is praised for its focus on fair values and the freedoms it provides managers, it is often criticized for being far too subjective and inviting “a human element that could increase the risk of financial

Another challenge convergence faces is the fact that under IFRS, there are little industry-specific standards, which has led many commentators to voice “concerns about how IFRS would impact their particular industry” (AICPA, 2009). Other critics have voiced concerns regarding the uncertainty surrounding funding for the IASB as it’s “largely funded through voluntary contributions from a wide variety of participants across the world’s capital markets. The concern with that model is that it leaves the IASB open to the perception that organizations that provide funding could try to influence the accounting standards” (SIAC, 2012). This observation questions whether there is true independence of the IASB and the integrity of its standard-setting process.

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting. SFAC No.3 defines 10 elements of financial statements. It is obviously a resolution of the definitions presented in the discussion mem for the conceptual framework project. Elements are what accounting professionals measure and the attributes is about how to measure. Definitions can be helpful to the financial statements which have been formulated in order to help professionals to specify the qualification are. Also, the definitions must be expressed in the metatheoretical structure.

This Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements for

It is important to be aware that financial accounting is an area in accounting where all financial transactions of the corporation are recorded in. It is a process that through time has become the systematic way for record keeping of all off a corporation’s transactions in order to be able to report the data in an efficient manner. It is because of this that is so highly regulated by the reporting authorities. The framework laid out by the IASB. It is within these standards that all the rules and regulations relevant to all aspects of accounting are laid out. These standards are prepared and explained in a very simplified, yet comprehensive manner, in order to allow financial accountants to perform their day to day operations. Moreover, it is to ensure that there is conformity and uniformity in all aspects of

Accounting was created thousand years ago. Many companies use accounting system to record, maintain and report, and analyze business financial transactions. Because managers and investors make their business decisions based on Financial Statement, information obtained from Financial Statement must be concise and reliable. Budgets and performance reports provide decision support, planning and control business operations; therefore, Financial Statements must be accurately to represent a true and fair view of companies. To evaluate results of information from Financial

Both the IASB and the FASB have a conceptual framework. The IASB’s conceptual framework is described in the document, “Framework for Preparation and Presentation of Financial Statements.” The FASB’s conceptual framework is developed in a series of concept statements, which is generally referred to as the Conceptual Framework. The IASB and the FASB are now working on a joint project to develop an improved common conceptual framework that provides a sound foundation for developing future accounting standards. [1]3 Such a framework is essential to fulfilling the

First of all, regarding the financial report preparation, the supporters to the principle-based accounting point out that the rules-based accounting contains numerous bright-line tests, numerous exceptions, large volumes of implementation guidance, excessive detail, which leads to complexity and uncertainty about the application of standard (Securities and Exchange Commission, 2003). In addition, according to Maines et al (2003), the principle-based standards, if implemented properly, can increase the usefulness of financial statement “by focusing on the primary characteristics of relevance and reliability”, which cannot be found in the rules-based accounting standards. However, the rules-based accounting has many unambiguous benefits. The first one is that the rules-based accounting is clear and less confusing for accountants. The clear rules provide

The IASB conceptual framework is a framework of theories prepared by a standard setting body aimed t dealing with practical problems faced by users of financial statements; the characteristics of accounting information; the elements of financial statements and concepts for measuring and reporting the elements such as assets and liabilities (Financial Times 2017). The benefit is that uniform accounting standards can be applied to deal with common accounting problems; have fewer standards to reduce the volume of standards; help accountants and auditors to resolve accounting issues. However one of the issues is the going concern assumption, which does not appear to take into account more serious risks that an enterprise may be associated with such as sustainability risks.

The traditional financial report is established on the basis of historical cost ignoring the influence and lacking of social contribution. For this reason, it is accepted that the reflection and information from the traditional financial report is not complete (Blair, 1995). Meanwhile, the timely efficiency and forecasting of financial report is lack (Wallman, 1996). For instance, the soft assets including human resource and talent capital are not confirmed and evaluated properly. For this reason, the financial report should have more flexible modes in order to satisfy the shareholders’ requirements. Furthermore, the traditional financial report is shortage of social responsibility in enterprise’s exposure.

It define the scope of judgment in planning financial statements by formulate the characteristic, activity and restrict of financial accounting and reporting. It also increases different of financial statements by reduce the number of other accounting methods. If standards were come from a reasonable style of concepts. Likewise, reporting requirement will be more constant and fair because they will record accounting base on former set of concepts. Moreover, the setting requirement will be more economical because problem should not be discuss from different position. In additional, it help to reduce accounting common error and political