Towards Global Accounting Standards

Introduction

The world is moving towards the verge of an accounting revolution, and the idea is to follow one single set of international accounting standards. The challenge that is being faced across the globe is regarding the maintenance of the financial accounts and comparing it across the world. The financial reporting landscape is changing, and the idea is to ensure better comparability and consistency. Financial analysis and reporting are regarded as one of the bedrocks of modern business (Sherman & Young, 2016). Financial reporting is vital to understand and recognize the untapped power along with the potential of the company. The main objective is to critically discuss the findings of Sherman and Young (2016) and to determine the comparability along with consistency amid the financial statements so that the current economic landscapes can be augmented. If you find yourself navigating through various complexities of financial analysis and reporting, seeking expert guidance can be the most valuable. For students who are grappling with the intricacies of financial accounting, accessing reliable accounting dissertation help can provide all the necessary support in place to excel in their academic pursuits.

Critical Analysis of the Findings

In a perfect world, the stakeholders have confidence upon the financial statements to make certain valid and important decisions about the business. The main intention is to mitigate the uncertainties and ensure that the future cash flows are effectively managed for better decision making about the investments and promoting efficient allocations regarding the capital. Modern methods of operating business are different and also complicated (Barker & Eccles, 2018). In the corporate world, the board members and investors depend upon several factors, which include magnitude, timing along with uncertainty that is related to the cash flows. The estimation of cash flows helps to make effective decisions and increases the effectiveness of business so that the capital allocation can be promoted.

However, it is a fact that the financial statement usually depends upon several aspects, such as poor estimates along with judgment calls. The second factor that is being discussed and revealed is standard financial metrics that are useful to make a comparison between companies so that the accurate judging can be done by creating value so that the errors injected is detected for better decision making. There have been several reforms in corporate accounting, and with online platforms, several dramatic aspects have been considered in the competitive business environment. The present reporting is guided by new rules along with governing revenues and recognition so that the expansion is continuously based upon proper measures (Beke, 2013). The critical factor that is being determined is that financial reporting is not always accurate due to several manipulations that impact the operating decisions that lead to financial reporting. The challenges are to reduce behaviour and improve the findings so that the issues that are related to financial accounting can be ensured to attain the current financial reporting landscape.

The issues of financial accounting are regarding the adoption of universal standards so that the accounting decisions made across the globe are effective. It is important to have a single set of international accounting standards that and therefore, the objective was to unite the U.S. Generally Accepted Accounting Principles or GAAP and the International Financial Reporting Standards or IFRS. However, the issue that was affecting the business regulations were several challenges that are part of the actual value (CFA Institute, 2016). The IFRS regulation is different, and it is revealed from the critical findings that the IFRS regulations are set by the countries, thus making the enforcement weak. It is, therefore, vital to state that the accounting quality is not up to the mark creating ineffectiveness in the process. Another issue that is being faced in accounting standards is revenue recognition. Revenue recognition is tricky when the idea is to determine the profits that are usually generated from the sales of products. On the other hand, under GAAP's new rules, if no proper ways are there to calculate product costs, then the business is not permitted to make the recording of the revenues. The rules of accounting tend to impact the business as per the findings, and the main factor is to determine the revenue recognition system. Business, along with the companies, is taking measures to incorporate new and effective revenues under GAAP and IFRS. One of the issues that are being compared in this regard is about fair value accounting. Investors in the U.K. are dependent upon the two vital measures to determine the value of a firm’s assets. One of the factors is the original price that is to be paid and can be regarded as an acquisition cost (Davern, 2018). The second factor is a fair value that is based upon the cost of the assets that are sold. The management process and accounting measures are confusing and controversial. To meet the issues, several new techniques have been considered upon so that the accounting practices are well managed. The issues that are stated are regarding the use of IFRS in slightly different ways, thus impacting universal standards. Another problem is revenue recognition as both the standards recognize revenue is different times and have some shortcomings. While making proper decisions, it is vital to state that people focus on costs that are accrued, thus impacting the corporate decision making leading to short term reporting.

The intention is to compare the same with new analytical tools so that the evidence of manipulation can be gathered. With the changes in the accounting regulations and to avoid frauds, it is vital to maintain transparency. In the present day context, it is noted that the fudging is rare in the process of accounting reports. Still, to ensure better focus, it is vital that investors, along with directors, are more transparent based upon the operating decisions. Verbal clues are one tool that is being compared for detecting the unscrupulous accounting practices (Ernst & Young LLP, 2013). The financial manipulation was prevalent earlier that led to corruption and led to greater uncertainties. Several issues led to the financial crisis, and the implosion of Enron is one such example. The main idea is to combat the issues through new techniques and effectiveness.

Comparability and consistency between financial statements

The priority is given to the Financial Accounting Standards Board (FASB) to improve the process of financial reporting and to manage the investors by offering benefits. The highest quality standard is based upon GAAP, which provides standards in the financial statements, thus offering clear and useful information. It is noted that the FSB thinks that seeking more comparable global accounting standards tends to improve the quality of the finances and its standards. The comparable standards usually have the potential to reduce the costs in terms of financial statements by making the worldwide capital markets more efficient (E.Y., 2017). The Securities and Exchange Commission (SEC) expects the use of FASB as the standard that leads to international comparability so that the public interest is well maintained. To achieve the current financial landscape, it is also vital that FASB develops a better strategy through developing high-quality GAAP standards. The idea is to participate in the International Financial Reporting Standards and enhance the communication along with national standards. Effective communication of financial information leads to better identification and development of relationships. The intention is to maintain better standards as the financial statements need to be easier to understand. The financial statements need to be easier to understand so that the relevant information is reached to the investors clearly and concisely (Lin & et al., 2016). The idea is to state and enhance effective communication through the application of IFRS.

The idea is to bridge the gap and increase the effectiveness by improving the accounting principles. It is believed that the effectiveness of the reporting is based upon the level of transparency and by the use of standards such as FASB and IASB. To attain the objectives across the globe, the accounting guidelines must be clear and the same so that the financial reporting information can offer the best decision making for the business. The redesigning of the financial statements is based upon several factors, which include the communication tools so that the financials are well met. The main idea is to communicate the same ideas and relevant information clearly so that the accounting principles, judgments, and estimates are effective (Sherman & Young, 2016). In the current situation, the basis of consideration is different from the old process as it offers better consolidated financial statements that impact the business. The financial statements are being prepared so that the judgment is effective in determining the accounting policies that make the process more relatable. The IFRS is being focused upon to attain better understanding and to manage the risks that are associated with the financial factors (Lin & et al., 2016). The regulatory activities, along with thematic reviews in the accounting, make the judgment more effective and reduce the uncertainties that are linked with the accounting principles.

Conclusion

From the analysis, it is clear that for better accounting and effectiveness, it is vital to ensure better communication and transparency in the financial statements. The findings focus on having one economic standard so that the understanding is the same across the globe.

References

Barker, R. & Eccles, R.G., 2018. Should FASB and IASB be responsible for setting standards for nonfinancial information? Green paper, pp. 1-43.

Beke, J., 2013. International Accounting Standardization. Chartridge Books Oxford.

CFA Institute, 2016. Bridging The Gap: Ensuring Effective Non-Gaap And Performance Reporting. Documents, pp. 1-72.

Davern, M., 2018. Is financial reporting still an effective tool for equity investors in Australia? ASAF Meeting, pp. 1-33.

E.Y., 2017. Applying IFRS Enhancing communication effectiveness. Building Better world, pp. 1-79.

Ernst & Young LLP, 2013. International GAAP 2013: Generally Accepted Accounting Principles under International Financial Reporting Standards. John Wiley & Sons.

Sherman, H.D. & Young, S.D., 2016. Where Financial Reporting Still Falls Short. Harvard Business Publishing, pp. 1.

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