Global Accounting Standards Essay

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International Accounting Standards: Adoption And Transition

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Traditionally, the accounting profession has been seen as a functionary occupation, the practitioners of which are concerned with the presentation of economic figures relating to individual and organizational financial performance. Accountancy has been seen largely as a field reserved for mathematical grunt-work, with its output serving as indicative of performance rather than incursive upon it. Today, that perspective has been altered significantly, for better and for worse. The role of accounting professionals has both diversified and expanded considerably over the past few years, with practitioners in this field coming to serve as primary decision-makers and organizational visionaries in their own right. This serves as a testament to the crucial contribution of accountancy-derived economic insight in the determination of sensible and profitable business decisions, reporting practices and levels of compliance with international law. In many ways, in both highly developed economic contexts such as the United States, the United Kingdom and the European Union, and in developing parts of the world such as the Bulgarian context in which this research has been conceived, the importance of the accountancy of organizations has accelerated with the acceleration in the interdependence of various parts of the global economy. This is the reality that has contributed to the development of the International Accounting Standards Board (IASB), the International Financial Reporting Standards (IFRS) and the impetus for the research contained herein. The IASB and its guiding doctrine in the IFRS are designed to regulate accounting standards across a global community. With economies in both the developed and the developing spheres interacting with greater fluidity under current global economic structures, there is a clear need to establish consistency and control across the variance of responsibilities which fall upon the accountant.

TOPIC: Essay on Global Accounting Standards Assignment

The research undertaken here will examine in specific detail the various implications of this issue through the lens of the accountancy profession. The consideration of such areas of relevance as free trade proliferation and the economic aims of globalization; the nature of the accounting profession today especially in light of accountancy as being at the base of many of today's major economic scandals and meltdowns; the experiences of developed markets such as the United States, the United Kingdom, Canada, Australia and India under the implications of IFRS and other such trade agreements; the experiences of fast developing markets but smaller markets and the general challenges facing all nations, continental unions and the International Accounting Standards Board itself in realizing the broader aims tied to the Standards in question.

A thorough discussion concerning the relevance of these various areas of consideration will help to provide a firm basis of understanding of the importance and meaning in the objective and resulting sections of the IFRS, from which key areas will be dissected to the benefit of our research process.

The primary objective of this study will be to clarify and evaluate the terms of existing international agreements on financial reporting standards with respect to the accounting profession. The research promotes the argument that effective global integration of standards will be based primarily on the capacity of participating economies to educate, certify and monitor accountants in a field which has suffered in recent years for its shortcomings in ethicality, competence and legal compliance.

The present moment is one of historical importance where the international recognition of accounting standards is concerned. For the International Financial Reporting Standards, the latter part of this decade has seen myriad advances in terms of the refinement of its principles, the expansion of its influence to compliant states and its proximity to its ambition of universal accounting standards for the global community. In many ways, though there is both a detailed history of evolution producing the IFRS and a clear global context for its emergence, it is only its incubation phases right now. The following history is a concise recounting of the events and context leading to this moment while simultaneously helping to illuminate the intended purpose of IFRS, its stated objectives and the conditions which helped to produce the policy terms to be examined in detail hereafter.

The history of IFRS ostensibly begins in 2001 with the creation of the International Accounting Standards Board. "Although it is several decades since the International Accounting Standards Committee -- the forerunner of the International Accounting Standards Board -- first started to develop standards for international use, it is only in the last few years that major steps have been taken to achieve substantive convergence on a global scale. At the heart of that convergence is IFRS." (Dilks, 1)

The International Financial Reporting Standards were enacted with the creation of the International Accounting Standards Board in 2001 but the development of these Standards actually precedes this considerably. Its formation was the offshoot of the already enacted International Accounting Standards, themselves produced by the International Accounting Standards Committee. This was organized in 1973 and was the most substantial recognition to that point of the internationalization of capital markets with the opening up of the world to capitalist development after World War II. The members were emissaries of their respective nations who, as accountancy professionals, corporate leaders or financial scholars, served in this part-time capacity to help establish regulations that could be applied to the unique challenges of international commerce. (Camfferman & Zeff, 1)

It was at the juncture preceding its emergence that the IASC would be conceived according to an apparent need to address the rising tide of firms with operations that spread across differing national contexts. The desire to reconcile the inconsistencies that had obfuscated financial reporting for such entities would lead to the spearheading of the Committee's development by British accountancy professional named Sir Henry Benson. In response to the problem notated here above, "Benson secured the support of the principal accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom, and the United States to establish a body that would narrow the differences across accounting standards." (Camfferman & Zeff, 1) Thus, the initial office for the operation was established in London and was funded by the accountancy groups respective to each member country.

As with many international governing bodies, the IASC is one which began with a far more informal tone and purpose than that which has evolved there from. From the time of its formation through its first decade, the Committee would issue policies that were designed with a high degree of flexibility and that were less a matter of enforcement than clarification in those areas where differing national accounting policies might demand guidance. That stated, the policies which it created would begin to take on some degree of seriousness when applied to developing countries which, in their interest in becoming more entwined with the world economy, would find more strict compliance in their best interests. This scenario, however, would ultimately segue into the era of globalization for which we provide a parallel history later in this literature review. Here, "as the pace of globalization picked up in the 1980s and especially in the 1990s, the IASC, with strong encouragement from major securities market regulators, began improving its standards to a level of quality that commanded attention and respect of national and regional regulators, national standard setters, major multinational companies, and leading accountancy bodies." (Camfferman & Zeff, 1)

With this improvement came an increasingly sturdy reputation as the foremost standard-making body for international accounting, which Camfferman & Zeff indicate would ultimately be transferred to the restructured and renamed International Accounting Standards Board. With the release of its International Financial Reporting Standards, comprised of a new set of Standards (IFRSs) and of either revised or simply commuted pre-existing Standards (IASs), the International Accounting Standards Board would position itself as the primary entity existing for guidance, regulation and oversight of international accounting and financial reporting.

Though there are certainly challenges, setbacks, philosophical conflicts and practical discrepancies which arise and which are addressed further in this account, these are essentially addressed by the overarching statement that "a high standard of accounting and financial reporting is an important factor in the proper functioning of capital markets and in strong corporate governance." (Camfferman & Zeff, 2) This is especially true as the complexity of international markets becomes a more persistent reality for nations which are collectively opening their borders to international trade with modest restriction. As the text denotes, the primary ambition for the establishment of these regulatory conditions is the refinement of the way that financial reports are presented so that these can become increasingly informative and useful to those making decisions according to their terms.

Here, the Camfferman & Zeff text offers one of the underlying premises to both the initiation of the IASC and the transition to the IASB as well as setting out a fundamental principle of our own research. The authors makes the argument that "accounting standards have the potential to contribute significantly to an improved quality of financial reporting by playing an educational role, by encouraging the resolution of differences of view through discussion and… [END OF PREVIEW] . . . READ MORE

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How to Cite "Global Accounting Standards" Essay in a Bibliography:

APA Style

Global Accounting Standards.  (2009, May 26).  Retrieved November 26, 2021, from

MLA Format

"Global Accounting Standards."  26 May 2009.  Web.  26 November 2021. <>.

Chicago Style

"Global Accounting Standards."  May 26, 2009.  Accessed November 26, 2021.