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regulatory authorities and financial advisers, media have indirect interest in the information, although they also are potential users of the specific financial information.
Hence, the difference in identifying the potential users of financial information would relate to the users’ interests in the business. Those users, who are involved in day to day running of the business, along with the future planning and prospects of the enterprise will be potential users of such information, having direct interest in the firm, while indirect interest holders would be those groups who do not intend to derive any direct benefits from the company, like trade unions, financial analysts, among others.
Those investors and users of potential information, who have direct interests in the affairs of the company, are interested in knowing its cash flow situation, as they need to know about the generation of cash flows, its timing and amount. This is due to the fact that the business enterprise is seen by such potential users as the source of cash generation, which could result in dividend and interest payments, loan repayments, appreciated stock prices and upward revision in the wages of company workers. The investors in a particular business expect handsome returns. Therefore, they are interested in knowing the company’s financial information. For managers and directors, the information regarding cash flow generation would lead them to a better understanding of their contribution towards the same.
While financial reporting has two aspects, internal and external, FASB statement has identified the internal group of potential users, who are interested in such information. As management has been identified as playing a major role in the use of financial information by external and internal users, it is responsible for passing the information to external agencies for their particular use. In addition, management is directly interested in the information about liabilities, assets
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FASB and the IASB. Both the boards have their own accounting standards, but due to enhanced globalization, both the boards have taken substantial steps in convergence of the accounting standards. Following are some of the reasons for the convergence of accounting standards.
As an accountant if I had a chance of working for one of these three boards I would choose the Financial Accounting Standards Board (FASB). My entire accounting training has been based on GAAP and the regulations and principles that were developed by the FASB during the last four decades.
Because of this, there have emerged varying practices of reporting EAs activity results. Lack of clear guidance from accounting standard setters (IFRIC and EITF) confused many companies (Deloitte, 1). U.S.GAAP In November 2003, the Emerging Issues Task Force (EITF) has initially discussed the Issue no.
The International Accounting Standards Board (IASB) and the FASB acknowledge that the convergence of International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP) is the primary objective of both boards.
To avoid recognizing contributions as revenue before they are available for expenditure, not-for-profits should consider pledges of cash to be received in future period. The FASB concluded that by promising to make payments in the future, donors implicitly restrict the donated resources to support of future, not current, activities.
The FASB is supervised by the Financial Accounting Foundation. The mission of the FASB is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public,
In 2008, an updated MOU was released. This updated MOU “sets out the priorities and milestones to be achieved on major joint projects by 2011”. Several areas such as consolidation, financial statement presentation, financial
Only one type of standard will be issued, and all standards will be numbered sequentially within each calendar year”.
2.The purpose of the FASB codification system is that it allows accounting and reporting
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