Modern accounting is an information base on which the organization prepares its financial statements.Â Information that is formed in accounting is used to produce management, tax, statistical reporting, if necessary, on the basis of this information is used and also other types of reporting.Â The accounting system is certain integrity, or set of elements of accounting are interrelated with each other.Â Such a system includes a logical set, which summarized the information sent to the correct measurement of the output in order to ensure the economic interests of those states, as well as any other, both external and internal users.
Under any fair (reliable) opinion there may reasonably be implied an opinion based on certain important or fundamental principles or concepts of accounting.Â In the international context they can be attributed to fundamentals, and may be reflected in legislation and accounting standards, at least five principles:
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Substance over form.
According to Intermediate Accounting, the Financial Accounting Standards Board (FASB) is an American private law and accounting body. It has the objective to determine what United States Generally Accepted Accounting Principles (U.S. GAAP) for companies and private organizations. Since 1973, it is by the Securities and Exchange Commission (SEC) accepted, and the American Institute of Certified Public Accountants (AICPA) in that capacity, as prescribed. Since the SEC, the U.S. regulatory body for the securities and stock exchanges, pursuant to its powers to the U.S. capital markets firms and organizations can do what U.S. GAAP, the provisions of the FASB for this binding.
According to Facts About FASB, the FASB is organized by the private Financial Accounting Foundation, which is based in Norwalk, Connecticut.Â The Foundation is responsible for the monitoring, organization and funding of the FASB.Â The FASB is funded primarily through a levy on all businesses that use the U.S. treasury operations. The tax is calculated on the basis of market capitalization of the company.Â The statutory tax liability was created by the Sarbanes-Oxley Act.
According to Intermediate Accounting, the FASB has five full-time members, members of the committee from two to five years.Â They are supported by more than 60 employees.Â Furthermore, they are the Financial Accounting Standards Advisory Council (FASAC) counsel, a panel of CEOs, CFOs and partners of accounting firms.Â The Emerging Issues Task Force (EITF) is a body that supports the FASB.
Â The objective of financial reporting:
The results of operations;
Changes in financial position.
Underlying assumptions in the management of financial accounting and the formation of financial statements are: accrual of revenues and expenses; continuity of the organization.
Qualitative characteristics of information are disclosed in financial statements:
The predominance of the essence over form;
Elements of financial statements:
Describing their financial situation at the reporting date:
Characterizing the financial results of the organization during the reporting period:
According to Facts About FASB, before 2009, there were a variety of standards, interpretations and pronouncements that have been developed by various accounting bodies authorized, including the FASB, as U.S. GAAP recognized.Â In 2009, the FASB has chosen for it by the relevant individual arrangements held systematized, and the Accounting Standards Codification (FASB ASC) activities.Â It is now the only source authorized by the FASB U.S. GAAP. In addition to the FASB, was developed the Governmental Accounting Standards Board (GASB), as private law and accounting committee under the umbrella of the Financial Accounting Foundation, U.S. GAAP for financial reporting by states, cities and communities in the U.S.
According to Intermediate Accounting, in the U.S., like many others, especially English-speaking countries, there is no single book of accounts.Â Employees of every corporation formed themselves that the list of accounts that are considered acceptable.Â Similarly, in the United States there are no uniform mandatory reporting forms.Â Financial documents in American companies do not sign the chief accountant and treasurer or controller, which saves accountants from non-relevant functions.Â It should be noted that the accounting profession is one of the most popular, prestigious and highly paid in the U.S. and has a strong tradition, history and high reputation in the world.Â However, the book business - is one of the most critical areas of activity, and in order to get the right and opportunity to engage in such activities, the expert must satisfy a number of fairly stringent qualifications of educational and ethical requirements.
The main organization that develops standards in the United States - is the Committee on the Financial Accounting Standards Board (FASB), - produces various documents governing the accounting and financial reporting:
Provision of concepts of financial accounting (FASB Concepts - CON), which constitute the conceptual framework, is the basis for standards, accounting principles, contain the purpose of drawing and qualitative characteristics of the elements of financial statements, basic principles for the valuation of assets and liabilities of the company, as well as the principles of theirÂ recognition.Â There are currently six positions.
Provisions of Financial Accounting Standards - the actual accounting standards (FASB Statements - FAS).Â Today, there are about 140 standards.
Interpretations are considered the modifications of existing standards (FASB Interpretations - FIN) or amendments.Â Currently, there are around 30 interpretations.
Technical bulletins - is a guide to the use of standards, the solution of separate accounting issues (FASB Technical Bulletins - FTB).Â At present, there are over 30 technical papers.
Provisions take into account new situations regarding accounting issues new and unusual accounting situations (Emerging Issues Task Force - EITF).
According to Facts About FASB, the structure of FASB, in addition to the working group dealing with the consideration of particular issues (EITF), includes the Fund of Financial Accounting (Financial Accounting Foundation - FAF), responsible for the selection of the head and members of the FASB, and the Advisory Board on Accounting Standards (Financial Accounting Standards Advisory Council - FASACÂ ), which provides advice and technical and organizational measures.
Despite the fact that the official function on the development of standards passed FASB, AICPA still plays a prominent role in the standardization of accounting.Â It consists of an Executive Committee Accounting Standards (Accounting Standards Executive Committee - AcSEC) to represent AICPA in the area of financial accounting and reporting.Â Beginning in 1974, AICPA publishes the following documents:
Statement of position provides guidance on financial accounting and reporting for individual sectors;
Practical newsletters - manages properties, to address the specialized accounting matters;
Industry guidance on accounting and audit - management of accounting and audit in selected industries;
Reports on research on accounting issues that require solutions.
According to Facts About FASB, financial accounting in the United States is regulated by a large number of regulations and provisions of unequal value.Â U.S. GAAP has a clear hierarchy: the higher level, the more important and is mandatory document.Â In case of conflict between several regulatory documents, the priority document has a higher level.
The first level "A" represents the standards and interpretations of FASB and the preceding organizations, APB Opinions, and newsletters AICPA (ARB), and it is not abrogated by subsequent decisions of the FASB, letters and other materials SEC.
The second level of significance is "B". At this level there are technical newsletters of FASB (FTB), industry leadership on audit and accounting of the American Institute of Certified Public Accountants (AICPA Industry Audit and Accounting Guides), statements of position (AICPA Statements of Position).
The next level is "C". It includes papers on specific situations: practical papers AcSEC (AcSEC Practice Bulletins), provisions on account of new situations EITF.
And finally, the last, the lowest level "D" has generally accepted accounting practices and documents reflecting the prevailing methods of accounting in certain industries - accounting interpretation of AICPA (AICPA accounting interpretations and implementation guides - Q & A).
According to Intermediate Accounting, the system of accounting standards the United States, on the one hand, quite lengthy and complicated, as it creates certain difficulties in applying the action of the corresponding documents, on the other hand, highly detailed, which allows you to find accounting solution for almost any problem. GAAP, widespread in U.S. as well as in many countries is due, above all, the development of American stock market and a leading U.S. position in world capitalization market. Many developing countries are taking them as the basis for developing their national accounting standards.
The continued expansion of capital markets for the boundaries of national markets, spurred by the desire of countries to create a solid, strong and liquid capital markets, which would lead ultimately to the economic growth. It is the main factor leading to the necessity of forming a single set of financial standards.Â Participants in these markets must have an understanding of the current economic situation as well as a high degree of confidence in financial information.Â This requires developing a single set of standards that would provide investors, creditors and other stakeholders with reliable and relevant information.Â We must insist on a unified set of international financial standards to be heard around the world.
According to News Release 07/1/09, in October 2002, the Committee on the U.S. Financial Accounting Standards (FASB) and the Committee on International Financial Reporting Standards (International Accounting Standards Board - IASB) have formed a design team and signed an agreement (Norwalk Agreement) to eliminate existing differences between the two reporting systems.Â Currently, SEC requires foreign private companies submit financial statements not only in the form of national standards, but also, necessarily, in the format U.S. GAAP.Â However, on 1 January 2007, within the framework of the agreements, reached on the convergence of the two accounting systems, reporting companies to IFRS will be made on American stock exchanges, without adjustments.
According to News Release on January 2009, work on the convergence of both systems was carried out by choosing the best standards, if there are differences between the already-enacted standards and develop joint solutions for the newly introduced standards.Â And interoperability is not in the formation of the exact same statements, but the same approach to the same type of transactions, the comparability of trends.Â Movement towards IFRS - is not a one-time change.Â Investors should be aware of new accounting standards.Â In addition, national standards are defined by infrastructure, which makes effective use of them in practice.Â One should not expect absolute perfection from the new financial reporting standards.Â They should perform well in their tasks - to provide accurate information to users transparent reporting.Â
According to News Release 07/1/09, given that the situation in the capital markets and the economy as a whole is constantly changing, the newly created standards require adjustments and modifications.
In March 2006, the FASB and the IASB issued a new memorandum of understanding, confirming their commitment to the creation of uniform standards of accounting.Â The protocol is based on the plan, officially dubbed tips at the end of 2002, however, it states that the original purpose of joint work councils - the elimination by 2008, the need for reconciliation statements to U.S. GAAP and IFRS - was delayed.Â The document contains the new plan targets for the next few years.
Thus, it is obvious what an enormous and painstaking work is necessary to companies, auditors, investors, financial market regulators to allow infrastructure to effectively apply uniform international financial reporting standards.Â However, the positive aspects of this process have a direct impact on international capital markets, ultimately improving the economic welfare of all market participants.
I think, that despite theÂ integration ofÂ worldÂ equityÂ markets still remain national differencesÂ in the rules ofÂ financial reporting.Â SomeÂ differencesÂ are minor,Â but many areÂ worried aboutÂ solving suchÂ fundamentalÂ issuesÂ asÂ a reportÂ on mergersÂ and retirement funds, as wellÂ asÂ the possibleÂ needs toÂ retreatÂ fromÂ the traditionalÂ basicÂ principles,Â what isÂ commonÂ in Germany's commitmentÂ toÂ protectingÂ the interests of creditors. Accounting andÂ reportingÂ isÂ the productÂ ofÂ economic and political systems, and therefore the convergenceÂ of accounting rules,Â rather,Â will beÂ the resultÂ of a broader approachÂ thanÂ its cause.Â CompetitionÂ betweenÂ national stock exchangeÂ forÂ the rightÂ to quoteÂ the newÂ shares, asÂ well asÂ the gapÂ between theÂ regulatory regimesÂ in the U.S. andÂ otherÂ countriesÂ have fueledÂ newÂ interest in theÂ international rules andÂ the work of the InternationalÂ Accounting Rules Committee.Â The difficulty ofÂ solvingÂ the problemsÂ remains the same,Â and it appearsÂ thatÂ progressÂ is more likelyÂ in casesÂ where theÂ flexibilityÂ of internationalÂ rulesÂ wouldÂ coverÂ the greatestÂ numberÂ of national accounting standards.
In my opinion, for many American companies issuing financial reporting in the united standards is also important.Â In deciding, in accordance with any accounting system - IFRS, U.S. GAAP or some other national accounting standards - there have to be prepared statements of the company, it is necessary, in my view, to analyze the two key factors.Â First, there should be defined the objectives of financial reporting standards different from American accounting standards. For example, if a company plans to attract British investors, or to place its shares on the New York Stock Exchange, it is obvious that the choice should be made in favor of U.S. GAAP, but if this investor will be from China and you need to place your shares on Tokyo Stock Exchange, it is preferable to chose IFRS standards. Secondly, it is necessary to evaluate the differences between the well-known financial reporting standards systems with respect to the specifics of the company and to choose the system of accounting and reporting, which will form the most useful and accurate information.
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