The paper 'Set of Accounting Standards' is a perfect example of a financial and accounting case study. The companies and organizations in Australia are guided by the Australia Accounting Standard Board (AASB) when computing their financial reports. The European commission once welcomed all the companies to compute and prepare their accounts. in relation to the International Accounting Standards (IAS) where the regulation would help in eliminating the barriers of trading the securities across borders (Barth, Beaver, and Landsman, 2001). Generally, IAS ensures reliability and the transparency of accounting information when preparing financial reports.
The European Commission worked closely with the European Financial Reporting Advisory Group which is responsible for providing knowledge and expertise in the legal issues of the European Acts in the setting of accounting standards (Barth, Landsman, and Lang, 2008). Below are some of the reasons why Australia has imposed accounting standards to all reporting entities: Transparency. While reporting guards against corruption which occurs when information is only available to a few individuals and they use it for personal gains. Australia has imposed accounting standards to all reporting entities (Barth et al. , 2001). Reliability.
All reporting entities are subject to a similar set of accounting standards and this assists investors in decision making if they are confident that the financial reports they use are reliable as they are all guided by the standards (FASB, 2002). Relevance. An organization using accounting standards help them to generate the data that is relevant and reasonable to all people interested in the information. In conclusion, Australian accounting standards emphasize the relevance to discourage misdirection of observers by providing relevant information (FASB, 2002). Comparability. The accounting procedures help the information of different non-governmental organizations to be the same and this results in easy comparability of financial entities.
Therefore, Australia based this reason when imposing its set of accounting standards. Audiences. The financial reports of different organizations are used by different stakeholders in making their decisions. The works of investors, reporters, and taxpayers highly depend on the accounting standards, and hence, Australia imposed their accounting standards to help the audiences in proper decision making (Ruland et al. , 2007). Understandability. The accounting information prepared in accordance with the accounting standards becomes very easy to understand and this is essential since the data is used by different people.
Australia`s reports are prepared according to the accounting standards to encourage understandability (Ruland et al. , 2007). Bookkeeping guidance. The accounting standards guide the accountants to correctly enter the different entities. The environment in Australia generally changes due to technology and other factors and this leads to the emergence of new entries such as internet market sales and these accounting standards help to correctly enter such entries (FASB, 2002). Protecting investors. The accounting standards protect the investors from losing their capital after investing in an organization.
The accounts help the investors to make rational decisions which will help him protect his investments (FASB, 2002). In conclusion, AABS is a vital element in ensuring the success of IABS. Through AABS, high-quality solutions are made to problems, acquiring resources, understanding differences in operating environments, and reaching interested parties (Barth et al. , 2008).
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