Critically Evaluate The Need For Accounting Standards Accounting Essay

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The international accounting standards committee was founded in 1973 by Sir Henry Benson to work for the improvement and harmonization of accounting standards worldwide .in this essay I will discuss about the accounting standards and the principle of accounting standards

In the first place I will discuss some advantage of the standards to start with Comparability, Financial statements should allow the user to provide forecasts of future cash flows, I think that something fundamental in the comparison standard in order to make comparisons with other companies to assess the performance of any company Besides,Credibility I believe that the accounting professions have a great responsibility rests with the employee and the accountant should have the most important thing which is credibility and accuracy in the accounts.Then, Influence In my opinion I think that the accountant must have played a significant role in influencing on his work and all decisions must be a foremost authority of opinion and ideas and offer suggestions that are practical and interest of the organization. The more profound impact has become the most important element in the organizationIn addition Discipline, Companies to respect the required standards and be disciplined because ultimately be exposed by the financial market and I think that discipline is an important point in the standard.

Furthermore I will discuss some Disadvantage of standards.At the beginning Adverse allocative effects, Adverse allocative effects could occur if standard setters did not take accounting of the economic consequences flowing from the standards they issued for example additional costs could be imposed on preparers, and suboptimal managerial decision might be taken to avoid any reduction in reported earning or net assets. After that Consensus seeking, Consensus seeking can lead the issuing of standards that are over influence by those with easiest access to the standard setters â€" particularly as the subject matter become more complex in my opinion I think that the criteria are developed from within the action plan it should imperative that the organization uses a process that ensures its customers. In the end Overload , Standard overload is not new charge .however; it takes number of conflicting forms, e.g. First, There are too many or too few standers Second, Standards are too detailed or not sufficiently detailed Third, Standards are general purpose Forth; there are too many standard setters with different requirement.

Next, I will argue some point about accounting principles , firstly , Presentation and preparation of finance statement, The framework differs from the international finance reporting standard in that it does not defined standard s for the reconazation ,measurement and disclosure of financial information nor does it override any specific international finance reporting standard .however ,if there is IFRS for a particular situation ,manager should consider the principles set out in framework when developing an accounting policy ,which should aim at providing the most useful information to users of the entity’s finance statement This exposure draft deals with the following:

The objective of finance statement, the objective of finance statement is that they should provide information about the finance position also the qualitative characteristics that determine usefulness of information of finance statement. And, the qualitative characteristics that determine the usefulness of information are relevance and reliability. Comparability is a qualitative characteristic that interact with both relevance and reliability next, the concept of capital, capital maintenance and profit. An appropriate capital maintenance model is not specified but the framework mentions historical cost of accounting, current cost accounting, net realizable value and present value models .To attract customers it should put special offers and successful financing and providing immediate service to them Secondly Recognisation in finance statement , The objective of finance statement is to disclose in the balance sheet and profit and loss account the effect on the assets and liabilities of transaction e.g. purchase of stock on credit and effect of events, e.g. accidental destruction of vehicle by fire. This implies that transaction are recorded under the double entry principle with an appropriate debit and credit made to the element that has affected, e.g. the asset element (stock) and the liability element(creditors) are debited and credited to recognize stock bought on credit . Events are also recorded under the double entry principle. In my opinion I think the stock of credit Maintain the bank's budget process or the organization Thirdly, Measurement in financial statements, the majority of listed companies in the UK use the mixed measurement system whereby some assets and liabilities are measured using historical cost and some are measured using a current value basis. The statement of principal envisages that this will continue to be the practical and states that the aim is to select the basis that:

Provides information about financial performance and financial position that is useful in evaluating the reporting entity’s cash-generation abilities and assessing its financial adaptability;

Carries values which are sufficiently reliable : if the historical cost and current value are equally reliable, the better measure is the one that is the most relevant; current value may frequently be no less reliable than historical cost figures given the level of estimation that is required in historical figures, e.g. determining provisions for bad debts, stock provision, product warranties;

Reflects what the asset and liability represents: e.g. the relevance of short-term investment to an entity will be the specific future cash flows and these are best represented by current value.

All in all different accounting standards are a drag on progress in mush the same way as diverse languages are an inconvenience. Unlike creating a world language, creating one set of standards is achievable