Discuss About The International Business Economics Research?
The accounting policies plays very important role in assessing the financial position as on date and the financial performance of the company for the year ending. The main aim of the report is to identify the role of the standard setting bodies in preparation and making the accounting standards applicable to the various entities. The second aim of the report is to understand the reasons for the resistant behavior of the United States of America in adopting the International Financial Reporting Standards for the financial reporting practices. The last aim of the report is to analyze whether the International Financial Reporting Standards have future in United States of America or not. With this the study has been conducted and ended with the appropriate conclusion.
Reluctant United States In Adopting The Ifrs For Financial Reporting Practices
The International Financial Reporting Standards have been prepared by the International Accounting Standards Board. The main aim of issuing the International Financial Reporting Standards is to facilitate the adoption of the uniform accounting policies and the procedures across the globe so as to provide the means for better analysis and better decision. It provides that with the application of the accounting policies in the uniform manner across the globe, the stakeholders including the shareholders of the company can have the required information through which they will be able to analyze the results of the company and can have the comparison with the benchmarks set in the respective industry and with the results of the competitors of the company (Broker, 2013).
The statement made by Me Alex Bogopolsky that the International accounting standard board has made many efforts approximately to thirty years in the development and preparation of the uniform accounting standards and has achieved almost acceptance across the globe is true and correct. It states that the International accounting standards board has developed the accounting standards for the benefit for not only of the stakeholders but also for the companies operating across the globe. But the word in the statement almost dictates that the International financial reporting standards so developed and made available has been accepted by most of the countries but the market of the United States of America is still in the resistant position to adopt the international financial reporting standards. Despite of the passing of the ten years and the full adoption of the accounting standards by many of countries, United States of America has still not in the state of acceptance of the globally set accounting standards. The following are the reasons for which the United States of America has not accepted the framework of universally accepted accounting standards:
Business Environment – The environment of the business in the United States of America is very strict and worst. Whenever any mistake or any discrepancies are noticed by the external agencies then it’s the auditors who are always held liable for such mistakes and discrepancies. In the current scenario the liability on the professionals are being imposed in high numbers but still the market of United States is resisting the adoption of International financial reporting standards. In the common practices while auditing the books of accounts there comes certain issues which requires the professional judgment of the auditor of the company and sometimes conflict arises within the issue (Cai and Wong, 2010). These are answered by the separate specific guidance notes issued by the Financial accounting Standard board and the International financial reporting standards only provide the detailed reporting rules with the principles. This has thus created more difficult situation for the market of United States to adopt the International financial reporting standards. It exhibits that the generally accepted accounting principles of United States will not be in consonance with the International financial reporting standards (Hickley, 2011).
Non Alignment by the Financial Accounting Standard Board – The financial accounting standard board has been in the process of detailing the changes in the International financial reporting standards on the regular timely basis. The changes so made do not align with the generally accepted accounting principles standards of the United States. They both still have the difference. It exhibits that the Financial accounting standard board is concerned with their own assumptions and the requirements and is not considering the need of the market of the United States. As on the august of two thousand and fifteen, it has been noticed that the developed projects do not in any manner converges with the existing US GAAP Standards. It includes like standards relating to employee benefit plans, treatment of normal purchases in relation to the electricity contracts, etc. The statement has been released for removing the technical differences between the old standards and the new standards but the way as to how the both standards shall converge has not been detailed and mentioned. It depicts that the financial accounting standards board has been looking after the specifications on their own (Smith, 2012).
No compliance of the Convergence Projects – The financial accounting standard board and the international accounting standard board has been engaged jointly in the most importance project namely the convergence projects. These projects details as to how the US GAAP standards shall converge with the International financial reporting standards. But these projects failed to achieve the objective as the main areas of concern has still not been answered by them and in fact they have brought the divergence between the two set of standards. The head of divergence is accounting for the leases, financial instruments, electricity contracts and the insurance contracts (Lovell, 2011).
Apart from above factors there is one main factor for the reluctance in non adoption is the role of political parties.
The convergence of US GAAP standards and the International financial reporting standards is very important in order to facilitate the better comparison of the financial position and the financial performance of the company with the standards of the industry within which the company is operation, with its competitors operating in the same country and the companies operating across the globe. The major benefit of this convergence will be received by the stakeholders of the company. In order to conclude, the financial accounting standard shall work for the convergence with the US GAAP standards at the high pace. Secondly United States of America shall start adopt the International financial reporting standards in order to make this baby project as the globally accepted projects with uniformity in financial accounting and reporting practices across the globe.
Borker, D.R., (2013). Is there a favorable cultural profile for IFRS?: an examination and extension of Gray's accounting value hypotheses. The International Business & Economics Research Journal (Online), 12(2), p.167.
Cai, F. and Wong, H., (2010). The effect of IFRS adoption on global market integration. International Business & Economics Research Journal (IBER), 9(10).
Hickley A, (2011), “US Decision could make or break IFRS”, available at accessed on 20/09/20017.
Lovell R, (2011), “Continued US Reluctance to commit to IFRS”, available at accessed on 20/09/20017.
Smith, L.M., (2012). IFRS and US GAAP: Some key differences accountants should know. Management Accounting Quarterly, 14(1), p.19.