Seven (7) advantages of IFRS and IAS.



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.

  • they guide preparer and user of financial statements.
  • standards compel organization to disclose information which they may not want to disclose had the standards not been in existence.
  • standards reduce the number of choices in the methods used to prepare financial statements thereby reducing the risk of creative accounting.
  • foreign companies which are target for takeover or mergers can be more easily evaluated.
  • the use of financial reporting standards enhances the objectivity and comparability of financial statements which would in turn engender reliability.
  • the use of financial reporting standards help to curtail or significantly narrow the divergence in the principles adopted by preparer of financial statements.
  • financial reporting standards improve the uniformity of treatment of transactions in the financial statements among companies thereby increasing the credibility and comparability of financial statements.
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    What is general purpose financial statements?

    gemeral purpose financial statement



    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. read more

    What does it mean to audit something? What are the things that can be audited?

    What does it mean to audit something? What are things that can be audited?

    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). read more