The paper "Issues in Financial Reporting" is a great example of an assignment on finance and accounting. i) Comparability: International standardization brings about greater comparability between entities and companies across the globe. It also enhances evaluation and analysis by international investment groups and other users of financial statements. ii) Reduction of cost: It lowers the cost of preparation of financial reports since compliance will only be to a single set of accounting standards rather than multiple sets. For companies with multiple listings, they are able to get reduced listing outlay. The costs will also be reduced in terms of training accounting experts as the accounting practiced all over the world are similar, hence the need to retrain staff when they go to a country that has different accounting standards will not be there as opposed to the case now.
This will increase efficiency and effectiveness and increase productivity, revenues, and profits. iii) It also minimizes the manipulation of accounting information since accounting reporting will be uniform in line with the international standard, unlike now where firms and countries can align with a standard that suits their objective.
It will also be easy to understand and interpret these standards due to their uniformity across the globe hence any malpractice will be easily detected. iv) It will lead to the establishment of a more transparent accounting system with greater accountability. Additionally, it will help maintain the credibility of financial reporting and increase the efficiency of auditing the accounting information. b) Disadvantages Inconsistencies- there is no complete uniformity in the adoption, application, and implementation of these standards have different levels of expertise. The international standardization of accounting standards does not guarantee uniform accounting practices in all countries.
That is, the countries may have similar accounting standards but different accounting practices. It is difficult to provide radical evidence on the advantages of uniform accounting rules nationally and internationally. Nature of converged standards; The nature of the standards to be converged is very different and this creates a big impediment to international standardization as different accounting bodies and countries will tend to pose resistance to abandon their own standards.
ReferencesBotzem, S. and Quack, S., 2005. Contested rules and shifting boundaries: International Standard Setting in accounting.