International Accounting Standards - Research Paper Example

Download file to see previous pages International accounting standards serve as the guiding principles behind the preparation of all accounting statements, however, it is also important to understand that there are wider gaps between the practices suggested by the standards and what is actually required for the financial analysis purposes. A normal process for formation of an international accounting standard comprises of writing draft standards and then sending them to the members so that valuable comments can be received. After this process ends, another draft is issued to include the changes suggested by the members and finally after incorporating all the comments, the draft is issued as a standard.
However, despite such an extensive process of formulating the international accounting standards, financial analysts especially have to adjust the accounting statements in order to derive meaningful results from such statements. This is often done in order to calculate the fair value of the business so that the value reflects the current marketability of the business. This paper will discuss the International Accounting Standards-12, Income Taxes from the perspective of a financial analyst.
Since, the formation of the modern corporation, the need for having accounting standards to regulate the preparation of financial statements in on the rise. Accounting Standards are also critical due to the fact that they standardized the accounting practices but also allow uniformity in the interpretation of information at the time of preparing financial statements.
Apart from this, it was also necessitated that there must be transparency and accountability of those who actually manage the affairs of the companies on behalf of their shareholders. The need for having international accounting standards was also sought due to the liberalization of trade by most of the western countries. The disclosure of information to the public, therefore, becomes more important because of the increased role of managers in managing the affairs of the firm. (Greuning & Keen,2001). ...Download file to see next pagesRead More