Financial reporting standards are set of standards adopted by certain jurisdiction in preparation of financial statements. there exist a number of acceptable financial reporting standards in different countries such as USA GAAP, UK GAAP, Plan Comptable Général (France) and International Financial Reporting Standards (IFRS) issued by IFAC. the financial reporting standards which used by majority of the countries in the world is IFRS. International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external.
The following are arguments for financial reporting standards.
A general purpose financial statement is the statements that is intended to meet the needs of users who are not in position to demand information that are tailored to their needs. such information is useful to existing and potential investors.
To audit loosely means to independently compare something with suitable criteria and give assurance that the compared thing comply or is in line with the criteria.
So to audit means to give assurance to someone about the condition of an item or information owned or prepared by someone else. In the audit, there are always three parties namely someone who does the audit (practitioner), someone who prepare or own item on behalf of another (responsible party) and someone who is going to use the item or information (the user).