Question

Do you believe that a single set of global accounting standards is desirable? Explain why or why not.

Answer 1

Yes, the world requires a global set of accounting standards even though some factors are limiting as described below

WHAT IS GLOBAL ACCOUNTING STANDARDS

Global Accounting standards are the set of principles and practices to be followed by the all enterprises who are following the system accounting to keep books of accounts and reports. In the present era of time  each and every country is having their own accounting principles and assumptions, how ever due to globalisation and increased flow of foreign direct investment (FDI) the business entities have to follow global set of practices in the field of accounting and finance. How ever theintroduction global standards also  create some issues to a certain extent.we can have simple discussion on this.

WHY WE WANT GLOBAL ACCOUNTING STANDARDS

As of now the need for getting a globalised accounting standards are of a matter of priority in front of global accounting bodies , they are buckled their shoes to converge all diversified reporting standards into one umbrella , following are the advantages accruing to the globe by introducing uniform set of accountimg standards

1- Single, structured and uniform accounting practices across the globe

The main characteristics of the global accounting standard is the creation of uniform reporting standards and rules which the existing system of accounting standards lacks across the globe. By having uniform accounting policies and standards it would surely eradicates the dissimilarities prevailing on the standards of various countries.

Due to increased foreign direct investment it is high time to have the commonly used set of practices.

2- Savings in cost and reduction of work load

Due to the introduction of common reporting standards the effort and cost of accounting work would definitely be lower as compared to the previous reporting time. So the effort and expenditure commonly incurring will be saved to a great extent and it will be a value addition to the business organisation .

3- Distant Controlling by parent company over subsidiary or associate company,

The other main advantages accrues to the business is the efficiency and effectiveness of the controlling of financial aspects across the world. Now the business enterprises especially multinational entities are facing huge difficulty in controlling their subsidiary financial reporting along with other group companies. As a practice of uniform global accounting standards will remove these kind of inefficiency .

4- Creation of transparency and easiness in accounting practices

This is also considered as the leading factor of the requirement of global accounting standards. By creating transparency and clarity every investor from all the corners of the world are ready to invest in every countries which is promising shining return on investment.

5- Excessive flow of foreign direct investment(FDI)

The system of uniformed accounting standards and practices would enable the financial statements and reports more transparent and also make it attractive to the various stakeholders. Then there is huge flow of money from all parts of the globe.

DEMERITS OF HAVING GLOBAL ACCOUNTING STANDARDS

Besides the advantages accrues to the enterprises and stakeholders following dis advantages also flowing to them how ever these are just adoptable and nominal as compared to the advantages are concerned. Following are the difficulties

1- World wide accounting curriculum should be changed according to the standards of the desirable global accounting standards

2- There is a difficulty in implementing for the first time for small and medium firms already following the national accounting systems and policies

3- To a greater extent it would also cause non – acceptance due to security of data and financial information of country as their internal policy

4- The introduction will also cause the period of reporting but how ever it cause irregularities in various continents across the globe.

Conclusion

No doubt about the requirement of global accounting standards among various stakeholders in spite of having some limitations that every system is possessing .It will add value to the international financial reporting and also creates uniformity among reporting entities by not creating an y room for ambiguity . In short we can say that it is advantageous even though there are some undesirable things.