International Accounting Standards Boards Essay Example

in Business, Bendrey, Hussey, and West (2004) from Thomas Learning in London state that the UK accounting profession plays a crucial role in promoting improved accounting standards. The authors' statement is contained within a paragraph tag.

Established in 1973 alongside the International Accounting Standards Committee (IASC), the IASB, also known as the International Accounting Standards Board, was responsible for releasing "the 1989 Framework for the Preparation and Presentation of Financial Statements" which is discussed in Bence and Fry's (2004) article on financial reporting's conceptual framework.

Following a period of 17 years, the IASC underwent a conversion and became known as the IASB or International Accounting Standards Board (134, Iss. 1335; pg. 88).

. Scott (2002) suggests that there should be a transfer of responsibility for setting standards in financial accounting on an international level. This is discussed in Volume 1, Issue ____ of the publication "An International Comparison and Evolution of Financial Accounting Concepts Statements".

The conceptual framework of financial statements, which is commonly known as their preparation and presentation, is described in 2; pg.163, 22pgs and can be found at http://www.The website accountingweb.co.uk's item with ID 140805 and date format %o-%B was accessed on November 29, 2005.According to Scott (2002), the IASB conceptual framework was developed by the International Accounting Standards Committee.

According to Thomas, A. (1, Iss. 2; pg.163, 22pgs), the conceptual framework of the International Accounting Standards Board (IASB) serves various purposes for individuals and companies. It assists them in determining their financial objectives and identifying ways to attain them. Additionally, it offers guidelines on how to present financial documents and appropriately recognize, measure, and summarize them.

The purpose of providing guidance to accountants for their various transactions

and items in their day-to-day work is stated in the Introduction to Financial Accounting, Fourth Edition, by McGraw-Hill (Maidenhead, pg. 498).

According to Higson (1995), having a theoretical foundation is crucial when addressing issues related to accounting. In their article "Is stewardship merely a comfort blanket?", they argue that such a foundation provides a solid framework for tackling these problems. The source can be found in Vol. 116, Iss 1227, on page 104 and is one page in length.

While the prior mentioned idea is valid in its support of directing accountants, it also furnishes relevant data for an array of individuals, such as managers, investors, customers, suppliers, the government and the public who have a vested interest in the enterprise. These individuals are known as Users and will be further discussed later in this composition. The Users' interpretations can vary depending on what data they are seeking to obtain.

Both the users and the IASB rely on the conceptual framework. However, they each have different perspectives and objectives. Users search for specific information while the IASB considers whether the framework is simple to comprehend and use when preparing financial statements. If the IASB concludes that it is straightforward, then the framework will likely remain unchanged. Conversely, if it proves confusing, the IASB will need to make adjustments to it.

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The current accounting standards are referred to by Thomas, A.

(2002), McGraw-Hill's Introduction to Financial Accounting, Fourth Edition, Maidenhead, p.494), or possibly "elaborate on...".

Thomas (2002) introduces future accounting standards in his Fourth Edition of "Introduction to Financial

Accounting," published by McGraw-Hill in Maidenhead, on page ___.

The conceptual framework has two main purposes. Firstly, it offers insight into the process of creating standards for the IASB and provides information about the voting process involved in making standards part of the framework. Secondly, it promotes harmonisation of regulations, accounting standards, and financial statement presentation procedures by minimizing the number of alternative accounting treatments allowed within international standards. (Source: http://www.accountingweb.co)

As per the source, accessible at http://uk/cgi-bin/item.cgi?id=140805;d=101;dateformat=%o-%B and accessed on 29th November 2005, there are multiple objectives of the conceptual framework. Nonetheless, it can be inferred that its main purpose is to...

The aim of this is to establish a basis for creating and assessing accounting standards, as well as assisting those involved in generating, utilizing or scrutinizing financial statements.

The fourth edition of "Introduction to Financial Accounting" by Thomas, A. was published by McGraw-Hill on a certain page in 2002. This publication offers beneficial advice regarding financial accounting.

According to (498), the conceptual framework attracts various types of users with different interests due to their diverse needs. Managers can also utilize the conceptual framework to make predictions regarding budgeting, planning, and forecasting future outcomes. Moreover, it can help them examine cost distribution, such as machinery usage efficiency.

Customers are commonly denoted as financial document users, since their primary concern is the likelihood of a business's future trading. Of great significance to customers is whether the business will continue to trade or not in the short term, particularly if they possess...

A commitment to a lengthy association with...

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Thomas (2002) explains in "Introduction to Financial Accounting, Fourth Edition" by McGraw-Hill in Maidenhead on page 10 that if a customer buys a defective electrical product, it can negatively affect the company.

When the business that sold the product ceases to exist, customers will encounter difficulties. They must handle returning the product, determine what will occur, and undertake all necessary actions. In contrast, if the business continues trading in future, they are responsible for managing all aspects including repair or replacement of products. The conceptual framework is also useful for investors seeking information.

Ensuring the protection of their assets is a top priority for investors, often referred to as the "..." factor, heavily influencing their decision making process.

According to Thomas (2002), effective management of an entity's resources involves both their safety and proper utilization to maximize profitability. These principles are outlined in Introduction to Financial Accounting, Fourth Edition, published by McGraw - Hill and located on page 10.

Investors will scrutinize management effectiveness in achieving profit growth. They use the conceptual framework to determine asset utilization, where higher profits indicate efficient use of assets. Conversely, decreased profits may signify asset underutilization, short-term use, economic slowdown, or consumer confidence issue. Investors prioritize effective asset utilization as their main criterion.

. According to Blake and Lunt's (2001) Accounting Standards (Seventh Edition), the correlation between risk and return is crucial in investment. Pearson Education Limited published this information in Harlow on page ____.

Investors and lenders alike are scrutinizing the information presented in the conceptual framework to determine interest in backing the business. The conceptual framework provides insight into the business' ability to repay lenders, including any applicable

interest, similar to making monthly payments on a mortgage for a loan of ?90,000 to start the business with a monthly repayment of ?500 plus interest.

By examining the financial records of a business, lenders are able to determine their ability to fulfill payment obligations. If the business is able to consistently make payments, this is beneficial as it allows them to potentially borrow more funds in the future. This is due to the fact that past payment history demonstrates responsible financial behavior. Similarly, suppliers also seek assurance that a business can meet payment obligations ("the payments of the sum due", Blake and Lunt, 2001).

Payment consistency is a crucial factor for both loan providers and suppliers to maintain business relationships with companies. If a company fails to make payments, it may lead to discontinuation of services by the supplier and rethinking of future dealings. Suppliers use the conceptual framework as a guide for decision-making.

Thomas (2002) suggests that the entity's potential buyers must assess whether they will sell to the entity and consider the probability of receiving prompt payment for any outstanding debts.

When utilizing the conceptual framework, workers may have inquiries concerning their job security. This includes the desire for employment that lasts a minimum of one year to support their households and meet financial obligations on schedule. Additionally, they may wish to pinpoint factors connected to company earnings and accessible funds to guarantee timely compensation for employees and sustained business operations.

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...what is the level of job security for an employee?" (Alexander, D. and Nobes, C.)

(2004), Financial Accounting An International Accounting, Second Edition, Pearson Education Limited, Harlow, pg.138). According to me, the conceptual framework may not be of concern to the public as most are not interested in whether a business is making a profit or loss. Nonetheless, some individuals may take an interest. It is important to note that the public sees the impact of a business on the community, environment, economy and other factors as being more relevant. IAS 1 is an accounting standard that specifically addresses these issues.

The contents found at http://www on IAS PLUS by Deloitte discuss the foundation for presenting financial statements with a general purpose.

According to iasplus.com/standard/ias01.htm (accessed: 29th November), the standard focuses on how financial documents are presented for users who need different information. Additionally, these documents must be comparable to past records and those of other businesses.

The reason for doing this is to enable users and others to observe that presentations are consistent for various businesses and from historical financial records. Moreover, IAS 1 establishes the framework and obligations for the layout of financial statements, offers guidelines on their structure, and sets minimum requirements for their content. As Deloitte's IAS PLUS states, "IAS 1 sets out the overall framework and responsibilities for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of the financial statements." (http://www.iasplus)

According to Evans (accessed on November 29th), there is a dilemma concerning IAS 1 due to the usage of the phrase "true and fair view."

, (2004) Financial Reporting, Fair Presentation

- Issues with Equitability, Vol.134, Iss. 1334; pg. 81) caused controversy in certain EU nations as they contended that it contradicted legal obligations, particularly tax legislation. Nonetheless, the IASB launched a fresh IAS 1 that specifies that "fair presentation" means "faithful representation" of consequences of dealings in accordance with definitions and recognition criteria contained in the Framework.

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According to Evans (2004), financial reporting and fair presentation face issues related to fairness, as detailed in Vol.134, Iss.

According to the conceptual framework (1334; pg. 81), I believe that every aspect of it is connected to the standard. This is evident when considering how information must be presented in a manner that enables users to easily access and gather the necessary information they require. For this reason, "IAS 1, Presentation of Financial Statements," must be incorporated. It is important for accountants or others who manage financial information to ensure reliability, relevance, and other crucial factors when producing financial documents.

Users can refer to the IAS 1 for guidance on what information should be disclosed, including the age of the information. According to the November 2005 issue of Accountancy magazine, the IAS 1 has been updated to include the disclosure of a company's objectives, policies, and processes for managing capital, quantitative data on what the entity considers as capital, compliance with capital requirements and the consequences of non-compliance (Accountancy, Institute of Chartered Accountants in England and Wales, London, Vol 136, No 1347, Iss NOV, pg. 94). These amendments provide vital information to users before reaching a judgment about a business.

The advantages and

disadvantages of having a conceptual framework in businesses can be observed. According to Williamson (2005), one of the benefits is that it makes it simple to follow since issues can be ranked. Check his article on the objectives of accounting at http://www.duncanwil.co.uk/objacc.html which was accessed on November 29, 2005.

The analogy of a ladder aptly describes the conceptual framework, as it comprises a set of guidelines that must align till the next stage can be reached. For instance, outlining objectives without knowing the intended users of financial statements is untenable, given these users need diverse information to meet their requirements. The framework facilitates gradual progression up the ladder by completing each step before proceeding to the next. Additionally, it helps businesses when new laws or changes occur, as it provides a means of resolution for associated problems.

Without a framework in place, it is impossible to have a rational discussion about the correct accounting approach for a particular transaction, as it cannot be argued for or against.

Williamson, D. discusses the objectives of accounting in his article available at http://www.duncanwil.

The main benefit of utilizing a universal conceptual framework (globalisation) is that businesses can adhere to one agreed upon standard, as opposed to various ones. This was discussed on November 29th, 2005 in the co.uk/objacc.html website. However, the drawback is that creating said framework requires thorough and current information gathering, similar to checking accounts prior to public release, which may take up to three months. Misinformation from the initial month could heavily impact overall figures presented in documents and present significant challenges.

If the conceptual framework did not exist, companies would likely use either USA GAAP

or International Financial Reporting Standards. However, using these standards would make financial statements difficult for users to understand. Consequently, producing accounts in this manner would be pointless. Therefore, I believe that all businesses should adopt the conceptual framework as an excellent piece of work. If it had more rules instead of guidelines, it would be even more effective since certain information would be required in the framework and other information would not. This consistency through rules would ensure that all financial documents have identical structure and content.