International accounting standards Research Paper

International accounting standards - Research Paper Example The purpose of this paper is to try and understand the implications the prevalent global financial crisis will have on the organizations that are placed in order to determine the accounting standards for firms to follow Now,in the U.S.,the applicable regulations are Generally Accepted Accounting Principles,while in Europe they are the International Financial Reporting Standards. However, we will be focusing more on the International Financial Reporting Standards in Europe which are surveyed and controlled by the International Accounting Standards Board; if nothing but merely due to a lack of space. Now, our strategy in dealing with this topic is going to be as follows: the inner workings of the global financial crisis and what it has become in the present will be critically analyzed as quite frankly, that lies outside the bounds of this topic. Rather, we will pick out some International Accounting Standards that are currently in place and actively applied throughout the world. We wil l then try to analyze whether a change needs to be made to these standards in order to make them more holistic with regards to the contemporary global financial landscape. [1]For the purpose of this paper, we have chosen International Accounting Standard 1 and 24. Now the reason for choosing these standards is very simple: the first international accounting standard is related to the proper documentation of the financial statements and their proper release to the public. This has been a major talking point during the recent global financial crisis i.e. firms have been alleged by all quarters to have misread and subsequently withheld important information from their investors which led to the escalation of a minute problem; which was the sub-prime mortgage crisis into this global financial crisis. [2] The other International Accounting Standard that we have chosen for our paper is IAS 24 which basically concerns the related party transactions. The choice of this specific standard had been geared by consistent notions running around the financial markets that organizations have used their related ventures of key partners in bailing out an firms which have been in financial distress as part of a setup which may not be wrong according to the letter of the law but is certainly ethically immoral and perhaps socially not optimal; given that such transactions of bailout have occurred. Based on our analysis of these two standards, we will try to rationalize a hypothesis for the question that has been posed to us at the start of the paper. [3] International Accounting Standard 1: The main purpose of the International Accounting Standard 1 is to formulate a sort of best practice for the manner in which financial statements of different companies are prepared for final presentation. This is largely in order to ascertain the seamless comparison vis--vis the financial statements of the organization that have been produced in the preceding years and with the financial statements of other organizations. To achieve this goal, this standard demarcates a holistic set of prerequisites with regards to the presentation of financial statements, principles governing their configuration and the least necessities that have to be present in the reports vis--vis their specific subject matter. A complete set of financials must include a Balance Sheet, an Income Statement, a Statement of changes in Owner's Equity demonstrating all the changes in the equity or changes in equity beside those transactions which have been conducted by equity holders whilst they used their position a s equity holders, a Cash Flow Statement and a Notes for Guidance [4] In addition to this, the standard is also very clear on the other issues with regards to the presentation of the financial statements in that these statements must be unmistakably demarcated and