Harmonization of Accounting Standards

WHAT IS IFRS?1

HISTORY/BACKGROUND2

THE DEVELOPMENT/FACTS4

February 26, 19984

September 23, 19984

May 11, 19994

July 8, 19994

August 25, 19995

February 28, 20005

February 2, 20056

Countries Affected By IFRS8

PROS AND CONS OF IFRS9

Pros9

Cons9

ITS EFFECT ON UNITED STATES10

CONCLUSION10

Harmonization of Accounting Standards

A careful choice of accounting policies is crucial as it aids in the comparability, analysis and interpretation of Financial Statements. Choice of accounting policy is now more linked to the region of a company and the region in which the subsidiaries of those companies operate in. The choice of accounting policies is further influenced by the regulatory environment of the region in which the company operates in. For greater clarification of the research it has to be kept in mind that the subject area of the research talks about subsequent measurement which differs from initial measurement (Nobes 2006).

What is IFRS?

International financial reporting standard (IFRS) is considered as common language which is used in many parts of the world in all the business affairs. It is an outcome for the growing investors in the world and increase in the number of the shareholders globally (Guttmacher Institute 2008). International financial reporting standard is initially started as a result of balance accounting system across the European Union which harmonizes the worth which has made the concept appealing and attractive to the world. IFRS are the set of standards that are used as an ordinary worldwide language for the business affairs and in this way the accounts of any company are comparable as well as understandable across the international boundaries. All these efforts are an outcome of rising international trade and shareholding and are particularly significant for the companies dealing in various countries (Peng et al. 2008). They are increasingly replacing a lot of different national standards of the accounting . Many companies whether small companies, medium and the large companies are increasingly using the IFRS throughout the world. IFRS has its own importance because the businesses of every type are using it because it is understandable and acceptable in most of the region of the world (Wiley IFRS 2009).

History/Background

The origins of the Standards Information International (IFRS) date from 1966, when several groups accounting in the United States, the Kingdom Attached and Canada established a common set of study. At first, the body dedicated to publishing documents on important topics, but short term, was creating appetite for change (Carmona and Trombetta 2008). Finally, in March 1973 it was decided to form formalize the creation of a body international Committee International Accounting Standards Committee (IASC, for its acronym in English) that formulation what would initially be known as International Accounting Standards, and be dedicated to promoting global acceptance and adoption. The IASC survived until 2001, when it was renamed IASB - International Accounting Standards Board. That same year, the rules were renamed, in English language, "IFRS - International Financial Reporting Standards.

Until the 70s, in the Republic of Panama, accountants and auditors often referred to "the generally accepted accounting standards" for preparation of formal documents, however, until then not accounting with a clear ...