The European Commission made the following statement in a press release issued i

Question

The European Commission made the following statement in a press release issued in 2002:
"European Commission (EC) has welcomed the Council's adoption, in a single reading, of the Regulation requiring listed companies, including banks and insurance companies, to prepare their consolidated accounts in accordance with the International Accounting Standards (IAS) from 2005 onwards, The Regulation will help eliminate barriers to cross-border trading in securities by ensuring that company accounts throughout the European Union (EU) are more reliable and transparent and that they can be more easily compared. This will in turn increase market efficiency and reduce cost of raising capital for companies, ultimately improving competitiveness and helping boost growth.
Required:

You are required to evaluate the above statement. In particular you should consider whether the adoption of Internal Financial Reporting Standards (IFRS) in different countries, with different overview and enforcement mechanisms, necessarily leads to generation of financial information that is more 'reliable' and 'comparable'. (10 marks)

Is it appropriate for accounting standard-setting bodies to consider culture and religion when devising accounting standards and regulations, particularly given the output of financial reporting is expected to be objective and unbiased? Explain your view. (10 marks)

Explanation / Answer

a.)According to my over veiw, this decision of preparing the consolidated accounts in accordance to the international standards is the best way to minimize the differences in the financial accounts of different states in the same country. Also due to the enforcement of the IAS , the clear idea of the financial positions of the companies can be verified and evaluated. This regulation in the countries will allow the market to know the reliable and clear picture of the banks and insurance companies to find the best capital struture for them.The enforcement of Internal Financial Reporting System by different countries will be benificial for the economical growth.IFRS is set of international accounting standards developed by IASB (International Accounting Standards Board) under the governance of IFRS foundation stating how the financial & accounting transactions and other events should be reported in financial statements.
Financial Data are the bible for investors to make investment decisions. The financial performance of the organisation is evaluated on the basis of financial reports. In order to analyse & compare the financial reports of multiple entities accurately, it is extremely important that the companies are following the same set of accounting standards while preparing their financial reports. However due to requirements of national economic, financial & legal systems of each countries, the company's are required to follow the reporting standards which are prevailing in their country of incorporation and this makes the comparison of financial reports of companies located in different countries ineffective.

b.)According to my view, it is not appropriate for accounting standard-setting bodies to consider culture and religion when devising accounting standards and regulations, particularly given the output of financial reporting is expected to be objective and unbiased because the culture and religion are different in the same country.Also if the accounting standards are based upon them,then they will not the clear picture of the economy of the country.The accounting standard are the base for the financial statements to prepare and show the reliable and accurate position of the market.So the idea of devising the accounting standards should be most efficient in terms of internationally accepted standards.

a.)According to my over veiw, this decision of preparing the consolidated accounts in accordance to the international standards is the best way to minimize the differences in the financial accounts of different states in the same country. Also due to the enforcement of the IAS , the clear idea of the financial positions of the companies can be verified and evaluated. This regulation in the countries will allow the market to know the reliable and clear picture of the banks and insurance companies to find the best capital struture for them.The enforcement of Internal Financial Reporting System by different countries will be benificial for the economical growth.IFRS is set of international accounting standards developed by IASB (International Accounting Standards Board) under the governance of IFRS foundation stating how the financial & accounting transactions and other events should be reported in financial statements.
Financial Data are the bible for investors to make investment decisions. The financial performance of the organisation is evaluated on the basis of financial reports. In order to analyse & compare the financial reports of multiple entities accurately, it is extremely important that the companies are following the same set of accounting standards while preparing their financial reports. However due to requirements of national economic, financial & legal systems of each countries, the company's are required to follow the reporting standards which are prevailing in their country of incorporation and this makes the comparison of financial reports of companies located in different countries ineffective.

b.)According to my view, it is not appropriate for accounting standard-setting bodies to consider culture and religion when devising accounting standards and regulations, particularly given the output of financial reporting is expected to be objective and unbiased because the culture and religion are different in the same country.Also if the accounting standards are based upon them,then they will not the clear picture of the economy of the country.The accounting standard are the base for the financial statements to prepare and show the reliable and accurate position of the market.So the idea of devising the accounting standards should be most efficient in terms of internationally accepted standards.

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