Financial Reports

QUESTION 1

Benefits of international standardization of accounting standards.

The International Accounting Standards Board sets accounting standards across the globe. Unlike country-specific standards such as the Unites States' GAAP (generally accepted accounting principles), international standards have no governing authority to enforce them, making them purely voluntary. Existing international standards carry a number of distinct benefits to participants, and they serve as an early template for future globally regulated and enforced standards.

Ethics

* Different countries and regions around the world boast very different cultures and norms, which manifest themselves in the prevailing business culture in the country. Some countries, for example, make bribery a rule of thumb in business, while others view it as highly taboo. International accounting standards set a unified code of accounting ethics to be followed across cultures. This simplifies disputes between companies in diverse parts of the world and helps companies comply with different legal guidelines around the world.

One major benefit of international standards is that they consider input from professionals and legal authorities around the world. This can create a set of ethical guidelines that do not favor one culture over another, as can be the case when a foreign company adheres to its own domestic ethical values.

Investor Benefits

* International standards for accounting systems and the format of financial statements simplify international investment decisions. Investors can compare the financial statements of companies following International Accounting Standards Board standards, or other international guidelines, regardless of the company's country of origin. Without standards, making comparisons becomes less reliable, as the information presented in financial statements is calculated using different methods. The adoption of international standards has allowed stock-trading...