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Required: critically evaluate the following statement: Accounting regulation is at a crossroads : many believe that we need a - Essay Example

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Name: Tutor: Course: Date: University: Accounting Regulation is at Crossroads Introduction In the recent past, there have been alterations in accounting regulations, as a result, of development of International Financial Reporting Standards. In September 2002, FASB and IASB agreed to work collectively, in consultation with other regional and national agencies, to remove the disparities between U.S…
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Required: critically evaluate the following statement: Accounting regulation is at a crossroads : many believe that we need a
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Download file to see previous pages 109). Also, companies operating in a certain country experienced difficulties while comparing their financial performance with foreign companies in the same industry. Consequently, users, preparers and regulators of financial reports recognized the need to develop a universal accounting regulation, which will ensure a universal disclosure framework (McEwen 2009, p. 110). This paper seeks to examine whether we require a universal recognized disclosure framework, which will offer guidance to preparers and regulators towards superior material disclosure. Disclosure Framework Full revelation principle is relevant to the concept of materiality. This principle necessitates that the entire material information has to be revealed in financial declarations either on the face of monetary reports or in the notes of monetary declarations (Bellandi 2012, p. 4). On January 2013, IASB (International Accounting Standards Board) released some of the outcomes of an investigation carried out lately on monetary information disclosures. Respondents to the survey recognized various aspects, which contribute to the problem of disclosure. The IASB received responses from 225 respondents across North America, Asia and Africa. Approximately 20 per cent of these responses came from users of monetary reports and approximately 50 per cent came from preparers (IASB 2013). The following are the survey highlights; first, more than 80 per cent of respondents settled that enhancements can be made to the manner financial information is revealed. Forty percent of these respondents considered that such enhancements were needed across all components of yearly reports and not only monetary statements. Most preparers of monetary statements recognized the primary difficulty as disclosure obligations being too broad with slight effort of excluding irrelevant information. Immaterial information has been referred to as revelation overload (IASB 2013, p. 3). Numerous users of monetary statements considered that preparers need to enhance the communication of relevant details within the monetary statements, instead of leaving users to sieve through enormous amounts of information. The survey identified a variety of views on the fundamental causes of the difficulty. Some respondents recognized the need to enhance the manner in which bookkeeping principles are set out (Virginia Society of Certified Public Accountants 2013, p. 3). Backhaus (2013, p. 2) notes that, other respondents articulated concerns that regulators, preparers and auditors are approaching monetary exposure as an exercise in compliance instead of as a way of communication. As the chairman of IASB, Hans Hoogervorst noted, the feedback demonstrated a need for auditors, standard setters, investors, preparers, and regulators to work collectively in order to deliver the needed enhancements to all disclosures. In January 2013, Financial Reporting Council of United Kingdom initiated consultations among regulators, preparers and users of monetary reports regarding disclosures. The topic of discussion was about thinking about revelations in an extensive context. In its contribution to this discussion, Grant Thornton agreed that there is an apparent need for a revelation framework to help the IASB and other agencies that disseminate corporate ...Download file to see next pagesRead More
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