Management and Financial Accounting - Essay Example

Management and Financial Accounting Critical Analyses of the Convergence project between IASD & FASD and International Accounting Standard And UK Accounting Standards. We will start our assignment with the Management Accounting which is the process of Analyzing, preparing, accumulating, identification and communication of information used by Management to plan, evaluate and control the organization’s objective for better results and Management Accounting is also useful for preparing the accounts for the non management group such as shareholders, tax authorities and regulatory agencies. This also includes of preparing the Formulation of plans and budgets which will be converted into financial accounts. It gives both Historical and future planning control. On the other hand the management account is a system of Accounting which deals with the information that is useful to the managers and employees with in the organization. Information of M A can be money or non money process. It helps in Management of plan, control and decision making process. It does not require any kind of legal requirement. In simpler words MA is useful in the assistance of planning, controlling, decision making and motivation. On the other hand financial accounting deals with the reporting of the official accounts on demand of the shareholder, government agencies and other parties external to the firm. FA deals with the accounts, records and the performance of the firm over a considered period. FA is limited to some companies and FA must be prepared by law. They are to be produced every year. FA mostly deals with money. It should operate with in the framework determined by law and IASS. FA represents the historic picture of the past operations. Preparing of these accounts gave birth to the some other standard boards under the authorities of the previous standard boards and the government authorities and the main aim of such standard boards is to build up a firm in which such standards are introduced which are useful all over the world and their principle is to from such standards which are useful all over the world and useful for education and, implementing in the calculation of accounts in the multi nationals. And they hope and try their best to create an international standard so compatible that no other firm can be compared with it. To overcome the problems, the respective organizations have been doing a project which we will discuss now. In the past times their has been a Convergence project between the IASB and FASB Whose main aim to fill the gap and over come the differences between the different standards through the world and improving their own standard. In this project the IASB, FASB and UK standard is included. In this assignment we will study about the different boards and the main aim which they are accepting with this project and what they will get through this meeting and this should be done individually and collectively for each firm so as to get a clear idea about each Firm and the result of this project. We should begin with the introduction and history of each Firm when was this formed and what was its main aim and what is the firm accepting with the Convergence Project. Before we analyze the project we should know about the firms or boards which are included in this project. Relations of one firm with the other and the relations of the firms collectively. Starting wit the IASB (International Accounting Standards) which was found on April 1, 2001 as the follower of the International Accounting Standard Committee based in London, UK. IASB is responsible for setting International Financial Reporting. And it hopes that by creation of International standard will make one set of financial statement more compatible with rest of the World. IASB is committed to develop a public interest, a single set of high quality and understandable global accounting standard that requires comparable information in general purpose financial statements. There are 14 members of IASB in which 12 are permanent. Among these members the complete work is divided i.e. 5 members must be auditors, 3 prepares of Account, 3 users of account and 1 an academic and the remaining 2 can be any of these. The IASB is an independent, privately funded accounting standard based in London. The IASB is also committed to co operate with national accounting standard and set to achieve convergence in accounting standards around the world. Financial Accounting Standard Board: FASB is formed to improve standards of financial accounting and reporting for guidance and education of the public, including issues, auditor and uses of financial information. The FASB operates under the insight of Financial Accounting Foundation, which is responsible for funding activities of FASB and its counterpart for state and the Governmental Accounting Standard Board. The foundation is responsible for selecting the Board of directors and the other members as in the other council’s and firms.11 members of the Board of Trustees of the foundation are nominated by 8 organizations and approved by the Trustees. These standards are critical, very much useful and efficient to the U.S. capital market. Now we will see the UK standard boards which have a similar aim and principle as that of the IASB and FASB for standards in principles of accountancy. All the European Union firms, industries and other multinationals use the principles UK standard board. By some of the articles we can say that the UK standard board uses the common and simple principles for making account. In the recent times the IASB and FASB have done a number of meetings and their Strategy for convergence of UK standards with the International Financial Reporting Standard (IFRS) has generated a lot debate and a lot of response from the constituents and have given the Boards a lot of response fame and money but the question not easy to answer. Another aim of IASB and FASB is to develop a high quality and compatible financial reporting standards that could be used for domestic and cross border reporting. The IASB and FASB Convergence project involves 2 kinds of projects, the 1st one includes short term project which will remove many differences between IFRS and US GAAP. The 2nd includes the strong and long joint between the IASB and FASB for improving the principles of accounting so strong that it can be compatible and useful all over the world. Though they are many issues and meetings between these boards important of all is the convergence project. In this project the drafts, articles regarding this meetings and other press reports released on the respective website have stated many things. In these meetings the IASB, FASB, other national and European bodies are involved and are jointly called as the ASB (Accounting Standard Board) the ASB will be dealing with their policies and future role. The draft was on convergence of UK standards with the IFRS (IASB and FASB jointly), it also stated that future relations of UK standard and IFRS can be more effective. It also stated that their will be no difference between the principles UK and IFRS. In this project the UK standard principle will be merging with the IFRS so that a principle can be made very efficient. These principles will be effective or implemented from 1 January 2009. The convergent project strategy gave birth to too many numbers Debates. In these debates the boards were divided among the different scales of industries that are IASB for small and medium Scales industries and the other boards according to the scale of the company. This means the principles which will be used for account preparation will be taken accordingly to the standard in which the scale is divided. The ASB have given a statement that the rules and strategy will change from only developing its own standards which means that the firm wants to be independent. The projects and plans will be implemented on time and with complete research. Another aim of this board is to join with other small or big firms for better ideas. The other projects and issues of this board are accounting for Pension, separate funds, defining the benefits of any project, defining the liabilities of the respective project etc... The board jointly issued many drafts and principles stating and informing the other firms about their new principles and rules, which were opposed by other firms and meetings, are still going on for solving these issues. Some other issues of this project which will get their result in coming years and a few got their result are accordingly to what the issue is. Conclusion: The conclusion for this project is not as simple as it looks; it requires a detailed and deep study into the principles, concepts, aims and history of each firm included in this firm, so that we can make out what a single firm is accepting from this joint firm. If all the firms are joining for a good reason then they should not be any kind of dispute among them and they should take decision collectively so that they get a good result. The organization should work for noble causes for free of cost. References:  Convergence the big debate goes on. [Online]. Available: http://www.frc.org.uk/images/uploaded/documents/insidetrack/InsideTrack47.pdf [6 august 2006]  http://www.fasb.org/faf  http://www.iasb.org/about/genralinformation.asp The international Accounting standards board’s search for a General purpose Accounting model [Online]. Available: http://www.cbs.curtin.edu.au/files/bence-fry.pdf [6 August 2006] Read More