Issues in financal reports

Essay by joanne_zhou81University, Bachelor'sB+, March 2006

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According to the decision of Financial reporting council (FRC) announced in 2002, Australian entities have to be reported under the accounting standards which issued by the international accounting standards board (IASB). For achieving the 'single market objective', it is essential to develop a single set of accounting standards. Therefore, IASB standards which are known as international financial reporting standards (IFRSs) have turned into Australian accounting standards. Just during the period of adopting IFRSs, arguments for or against this decision come from all around.

A lot of benefits are insisted by those who support the adoption of IFRSs. They argue that

1. For companies, high quality accounting standards promote their ability of accessing capital. The continued strong expansion of the capital markets across national borders has become the key force favoring a single set of globally accepted accounting standards. (Donald T. Nicolaisen 2005) Under the desires of achieving strong and stable capital markets from different countries, reliable and transparent accounting and financial reporting are needed for decision-making of those providing capital.

(Med 2004) Especially after the 1998 Asian economic crisis, a single set of financial reporting standards renewed this expectation.

For example, in order to access the world's largest capital market------America's capital markets, the development of a strong set of international accounting standards will be helpful for non-US companies. Those non-US companies who wish to issue securities in United States have been required to adopt US generally accepted accounting principles (US GAAP), or to harmonize their financial statements to US GAAP. (Timesonline 2004) It is undoubtedly time-consuming and increasing cost. The IASB and the US standard-setter are now working together to eliminate differences between existing IFRS and US GAAP, just like happened in Australia, Russia, etc. The kind of unification in accounting standards between nations enable national companies to...