Essays on Regulation of Financial Accounting Being Political in Nature Assignment

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The paper 'Regulation of Financial Accounting Being Political in Nature' is a great example of a Fiancee and Accounting Assignment. The European Union entered into an agreement to adopt unified accounting standards that would help boost investments in the European Union countries. The commission announced the move to standardize and regulate the International accounting standards (IAS). Reliability, transparency, and comparison were the main reasons as to why the Union proposed the unification of reporting through the regulation of the IAS. However, it is not possible for a given market to control itself, thus the government and other regulatory bodies have to be central in regulating the market.

The European Union was a body that was created by a number of countries that were colonized by Britain. Nevertheless, it is important to note that there is more than reliability, transparency, and comparison in the setting up of the IASs. Since the regulations are mostly set by those by bodies that are given power by those in authorities, the IASs thus have a hidden political and legal agenda. Similarly, before the regulations and standards are enacted into accounting laws, they require to be approved by those in authority.

Where those in authority have the opinion that the new standards will be disadvantageous to them in most cases fail to approve them into laws. According to Nobes and Parker, (2004), in most cases, the European Union fails to endorse advanced regulations that are usually advanced frequently by the international bodies without having them to be in control of the issues. It simply means that the European Union is unwilling to given the accounting body the approval to make new standards if they are not available to consider the details provided by the new IFRSs.

The regulation of financial accounting standards has been politicized as argued by Ball, (2006) in the move by the European Union to set up a committee of eleven members who comment on each of the new standards before they are approved. Whether the adoption of Internal Financial Reporting Standards (IFRS) in different countries is necessary for the generation of ‘ reliable’ and ‘ comparable’ financial information. As the world increasingly becomes a global village, there has been an increased need to provide international financial and reporting standards that are acceptable and reliable all across the world.

With an increase in cross-board investments, there has been an increased demand for accounting standards to be regulated to suit all the practices. Most countries that have been recently industrialized have been using international accounting standards as part of their national requirements. These countries have had a growing need for reliable financial statements and information that meets all the requirements of the end-users for the domestic and international providers of capital. Continuous research has over the years been conducted on by the financial accounting standards board staff, the IAS setting board, and the foreign national to ensure that the standards provided by the study are credible, reliable, and comparable by all users around the world.

For this reason, Irvine (2008, p. 127) argues that emerging economies need to adopt IFRS standards and western accounting technologies in order to gain credence in the global capital markets. Given the process that is involved in developing the accounting standards, all possible shortcomings in the standards are eliminated to make them reliable and comparable as provided by the European commission’ s statement in 2002.

The constituents involved in the European Union drafting of standards provide their submissions on exposure drafts so that they can have their reports unified so as to harmonize the accounting practices around the world.

REFERENCES

Baker, C. R., 2005. What is the meaning of ‘the public interest’ Examining the ideology of the American accounting profession. Accounting, Auditing and Accountability Journal , Volume 18, pp. 690-703.

Ball, R., 2006. International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and Business research,, pp. 5-27.

Chand, P. & White, M., 2007. A critique of the influence of globalization and convergence of accounting standards in Fiji. Critical perspective on accounting, 18(1), pp. 605-622.

Clarke, F., Dean, G. & Oliver, K., 2003. Corporate Collapse, Accounting, Regulatory and Ethical Failure. 2 ed. Cambridge: CUP.

Helm, D., 2006. Regulatory Reform, Capture, and the Regulatory Burden. Oxford Review of Economic Policy, 22(2), pp. 169-185.

IFRS Foundation, 2013. The move towards global standards. [Online]

Available at: http://www.ifrs.org/use-around-the-world/Pages/use-around-the-world.aspx

Irvine, H., 2008. The global institutionalization of financial reporting: The case of the United Arab Emirrates. Accounting Forum, pp. 125-142.

Morgenstern, R., William, D., Pizer, A. & Jhih-Shyang, S., 2002. Jobs Versus the Environment: An Industry-Level Perspective. Journal of Environmental Economics and management, Volume 43, pp. 412-436.

Nobes, C. & Parker, R., 2004. Comparative international accounting, Harlow: Pearson Education Limited.

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