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Thursday, 24 December 2020

Need for convergence towards global standards




the last decade has witnessed a sea change in a global economic scanner Rio. The emergence of transnational corporations in search of money not only for fuel in growth but to sustain ongoing activities has necessitated the raising of capital from all parts of the world across from the foot of each country has its own set of rules and regulations of accounting and financial reporting. Therefore when an enterprise decides to raise capital from the markets are there in the country in which it is located the rules and regulations of that other country will apply and this, in turn, will require that the enterprise is in the position to understand the differences between the rules governing financial reporting in the foreign country as compared to its own country of origin software for translation and re-installments are of utmost importance in a world that is rapidly globalizing always. In themselves also the accounting standards and principal need to be robust so that the largest society develops a degree of confidence in the financial statements which are put forward by organizations.

international analysts and investors would like to compare financial statements based on similar accounting standards and this has led to the growing support of an internationally accepted set of accounting standards for cross-border feelings. The harmonization of financial reporting around the world will help to raise the confidence of investor generally in the information they are using to make their decisions and assesses theirs. Also, a stock need was felt by legislation to bring about uniformity enolization compatibility transparency and accountability in financial statements of having a multiply city of accounting standards around the world is against the public interest if accounting for the same events and information produces different reported numbers depending on the system of standards that are being used then it is self-evident that accounting will be increasing the this credited in the eyes of those using the numbers for WhatsApp with created confusion and carriages and facilitates the foot of the core for these pills is to have a single set of global standards of the highest quality set in the interest of public foster global standard cross-border flow of money global listing in different process and compatibility of financial statements.
the convergence of financial reporting and accounting standards is a valuable process that contributes to the free flow of global investment and receives substantial benefits for all capital market share stakeholders. It improves the ability of investors to compare investment on a global basis and thus love lowers the risk of errors of judgment for it facilitate accounting and reporting for companies with global operations and eliminates some costly requirement say restatement of financial statements.
It has the potential to create a new standard of accountability and greater transparency, which are values of great significance to all market participants including regulator switch off it reduces operational changes for accounting firms and focuses their value and expertise around and increasingly unified set of standards it creates an unprecedented opportunity for standard setters and other stakeholders to improve the reporting model.
For the companies with a joint listing in both domestic and foreign country come on the convergence is very much significant.


International financial reporting standards as global standards

with a view of achieving convergence towards global reporting the London-based namely the international accounting standards committee responsible for developing international accounting standards were established in June 1973. It is presently known as the international accounting standards board the IASC comprises professional accountancy bodies of over 75 countries full stop primarily the IASC was established in the public interest to formulate and public international accounting standard to be followed in the presentation of audited financial statements of international accounting standards were issued to promote acceptance and observance of international accounting standard worldwide. The member of IASC has undertaken a responsibility to support the standard formulated by IASC and to propagate that standard in their respective countries.
between 1973 and 2001 international accounting standards committee realize international accounting standards. Between 1997 and 1999 they restricted their organization which resulted in the formation of the international accounting standard board. That these changes came into effect on 1st April 2001. Subsequently, IASB is issued statements about current and future standards: ISB publishes its standards in a series of announcements called international financial reporting standards for each of our IASB has not rejected the standard issued by the IASC. Those pronouncements continue to be Designer knitted as international accounting standards.
the term IFRS comprises IFRS issued by IASB; IAS issued international accounting standards committee; interpretations issued by the standard interpretations committee and IFRS interpretations committee of the IASB.
International financial reporting standards are considered as a principal base set of standards. In fact, the established board rules rather than dictating specific treatments for every measure nation is moving towards adapting them to the same extent of a large number of authorities require public companies to use IFRS for stock exchange listing purposes and in addition banks insurance companies and stock exchange main use them for their stated they really required reports of stocks over the next few years thousands of companies will adopt the international standards to stop this required will if affect about 7,000 enterprises including their subsidiaries equity investors and joint venture partners for each of the increased use of IFRS is not limited to the public company listing requirements or status reporting. Many lenders and regulatory and government bodies are looking to fir is to fulfill local financial reporting obligations relating to financial or licensing.

Benefits of convergence with IFRSs

beneficiaries of convergence with IFRS is such as the economy investor's industrial etc.
1) the economy: when the markets expand globally the need for convergence increases since the convergence benefits the economy by increasing the growth of the international business process of its facilities maintenance of orderly and efficient capital markets and also help to increase the capital formation and thereby economic growth. It encourages international Western and thereby leads to more foreign capital flows to the country.
2) investors: a strong case for convergence can be made for the viewpoint of the investors who wish to invest outside their own country for stock investor 12 information that is more relevant reliable timely and comparable across the jurisdictions first of financial statements prepared using the common set of accounting standards help the investor better understand investment opportunities as of first to financial statements prepared using a different set of national accounting standards for investors confidence is strong when accounting standards used are globally accepted. Convergence with IFRS contributes to investors' understanding of confidence in high-quality financial statements.
3) the industry: images force in the movement towards convergence has been the interest of the industry for stock the industry is able to raise capital from foreign markets at lower cost if it can create confidence in the minds of foreign investor that their financial statement complete with globally accepted accounting standards. With the diversity in accounting standards from country to country enterprise who operate in different countries face a multitude of accounting requirements prevailing in the country schools of the burden of financial reporting is lessened with the convergence of accounting standards because it simplifies the process of preparing the individual and group financial statements and thereby reduces the cost of preparing the financial statements using different sets of accounting standards.
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