Accounting Standards

Accounting Standards in the Financial Reporting Process

Accounting Standards in the Financial Reporting Process

Introduction

In a world where technological advances are producing amazing improvements in communications, the public is becoming more international in their expectations, so the use of financial statements as a means of communication by companies has increased constantly. Investors in international markets need to ensure that the information on which they base their assessments has been produced using the accounting principles recognized in their own country and comparable to others regardless of country of origin. This paper will discuss the history and objectives of accounting standards in the financial reporting process while on the other side, its aim is to analyse the importance of international accounting standards and the role of accounting standards for cooperate governance.

Background of the commission of the IASB

Founded in June 1973 as a result of agreements between accounting bodies in Japan, France, Canada, Australia, Germany, United Kingdom, Mexico, Netherlands, and the USA.

Post the approved text of International Accounting Standards (IAS)

Accounting bodies are members of about 70 countries that represent men and women engaged in business throughout the world in public accounting as independent auditors. In 1981 it was established that the IASB has full and complete autonomy in setting international standards and documents for comments on international accounting issues.

History of Accounting Standards

Trading took stage in the historical development of nearly six centuries and characterized by the appearance of double entry, chronological and systematic records of account, balance sheet, ledger, control methods led to the creation of national trading systems. The entrepreneurial phase characterized by the appearance of industrial accounting, which determines the cost of individual products, methods of overhead allocation, the decimal system of classification of accounts. The peak is the creation of plans for business accounts. The organizational phase of the development and improvement of accounting is generally characterized by the state standardization of accounting, which led to the emergence and development of national plans of accounts (Germany 1937, France 1947., Etc.).

The main contribution to the development of accounting at this stage was split into two accounts: financial and analytical principles and the emergence of managerial accounting, decisive tactical management issues by identifying and analyzing the results of the centres of responsibility, greater use of financial and management accounting targets: standards, regulations , estimates, data on the foresight, etc. As a result, the accounting system used by organic targets, characterizing both the general results of the enterprise, and the centres of responsibility. Accounting, accumulating targets, received the name of the budget and provided information that characterizes the balance sheet, profit and loss, self-financing, procurement, manufacturing, marketing, operations responsibility centres.

Optimization phase is characterized by the fact that the accounting, along with the tactical decision was to decide the strategic management tasks through the use of computers in accounting and a clear division of costs to variable, proportional to the volume of production and permanent or structural, are independent of production volume, which is the basis used in accounting method " direct ...