The author in this article discusses the importance of the consistency of the accounting standards as the need of the hour because of the fact that the reliance placed on the principles has been, thus far, unable to ensure its application consistently and the management tends to…
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Consistency can only be maintained in the companies throughout, if the accounting standards are itself consistent.
Even though the establishment of the accounting standards has eradicated the ambiguity to some extent but it does not provide much uniformity in the judgmental matters. The rules and principles must be given much importance in this regard as well as their application, in order to maintain the coherence of the application of the accounting standards. In addition, judgmental matters must also be dealt with great regard such that the basis is not distorted. Only the internal consistency cannot assure the consistency of the accounting standards which is because the principles do not guide the managers in judgmental matters which in the end becomes a hurdle in the coherency of the accounting standards.
There is vast importance of the consistency of the Accounting standards used all over the globe. The rapid change is also resulting is ambiguity on part of the investors and other users of the financial statements which must be eradicated.
“The boards have also acknowledged the need of coherence of the accounting standards as well as the accounting policies which would benefit the creditors, investors and other users of the financial statements.” (Helium, 2010)
It is very necessary that all the financial statements give a familiar representation of the policies and procedures applied as well as the results reached, which would lead to the user of the financial statement to reach a better conclusion. “There is an immense need for the consistency of the accounting standard’s application in areas of revenue and expenses through internal consistency.” (Mourik)
The IASB has also taken a vast initiative in this regard in order to urge the makers of the financial statements to invoke consistency in their financial statements. IFRS 8, in this regard has stated “All the entities
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