The World Needs International Accounting Standards Essay -- Accounting

pecuniary reporting has a responsibility to communicate the economic condition and procedure of an enterprise. This has to be accurate, reliable and comply by the accounting standards. Effective m startary reporting is essential in booking confidence in an economy and further investors to invest.Towards the end of 2008, the monetary sector across the world was becoming progressively unstable. Lehman Brothers had been decl ard bankrupt, Various allegations towards accounting standards tolerate been made in coition to the financial crisis.A lot of banks worldwide valued most of their financial pluss at historiccost, the cost at which the assets were initially bought at. These figureswere not change to the current market values, and therefore were overestimated on the financial accounts. The incurred injury sit near, was also heavily criticised. This model required only those lossesto be save which would have a damaging result on future cash flows. The damagingresult w ould have to be reliably estimated. This model did not permit the effects of futurelosses to be acknowledged, which was one of the reasons why losses were being severelyunderstated.Had these banks valued their financial assets at fair-value cost, then theaccounts of the companies would have been giving a more realistic imagine of profits & losses, and whitethornbe the crisis would have beenRecognised earlier in time.Off-balance canvas tent standards have also been blamed for covering companylosses. Off-balance sheet asset/liabilities are those which are exemptfrom appearing on the balance sheet. It has been govern forward by theFinancial Crisis Advisory Group that the off-balance sheet standards mayhave hidden losses, therefore... ... risk factors.In response to the financial crisis, the Boards have been advised to emphasise to businessentities how crucial it is that the quality of the data recorded for financial reporting should beto a high standard. A spheric convergence of ac counting standards is more imperative than ever, as financialmarkets are now global markets. A uniform set of accounting standards around the world would enhance transparency, encourage efficient allocation of resources and would allow risks to be recognised.At the moment, over 100 countries have adopted to the IFRS (International Financial report Standards). The Boards have advised that economies that have not adopted theIFRS, should set a practical timetable for adopting these standards. It is not only vital to converge, but also to maintain common solutions and interpretations between economies.