The paper "Globalization of Accounting Standards " is a good example of a finance and accounting assignment. Most businesses can never stay away from adopting the global accounting standards due to various advantages. The change to International Financial Reporting Standards (IFRS) from U. S. GAAP started early in 2005, with several states in the European Union adopting techniques to organize their financials in agreement with the new principles ((Deegan et al 2007 p. 54). As of 2005, various states that were preparing to change to the U. S.-based Generally Accepted Accounting Principles (GAAP), have altered their concentration to apply IFRS. Due to the increase in international business activities, many countries have made many companies be independent in international trade and investment. Part a Advantages of global accounting standards Control of business activities The globalization of accounting standards helps to control the way in which businesses carry out their accounting work.
The accounting practices in the business world need to be controlled due to negligence and malpractices by many companies (Chua et al. 2008 p. 466). Companies are known to meddle with financial information so that they can attract potential investors to the company to invest and provide the capital requirement for the company.
For instance Shell Company, a company that provides oil worldwide was accused of overstating its oil reserves so as to draw more investment. It finally confessed to having tampered with its financial information. International accounting standards help to evaluate the financial procedures followed by businesses and the format used when publishing financial statements. Different countries have adopted accounting measures and procedures structured in the International Accounting Financial Reporting Standards to reduce discrepancies in financial analysis. It also helps to improve investment opportunities for companies and make financial data accessible. Investment decision Investors from different countries are able to use the financial ratios of companies listed on the Stock Exchange to make investment decisions.
Investors are able to determine the financial health of the company before they can decide whether to invest in the company or not.
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