Question

A. Mention and describe one of the strategies to develop accounting standards for develop- ing countries.

B. What are the advantages and shortcomings of the strategy?

Answer 1

Answer:

The need for the accounting standard is to avoid the inconsistency that might exist between accounting principles and accounting practices and to ensure continuity between the various underlying accounting principles

A. Strategies to Develop Accounting Standards for Developing Countries:

1. The first move is to recognize financial reporting problems based on stakeholder requests/recommendations, or by other means.

2. On the basis of an overview of issues resulting from feedback obtained from stakeholders, decides if the Accounting Standard is really required.

3. Deliberate on the different monitoring issues found and discussed at one or more public meetings with immediate stakeholders.

4. Issue a discussion paper to gain standard feedback in the early stages of standard and obtain feedback.

5. Has an Exposure Draft public roundtable discussion where appropriate.

6. Input emails, a public roundtable discussion, and all other details gathered via the correct procedure. At one or more public meetings, the Board redeliberates the proposed provisions, taking careful consideration of the stakeholder input received.

7. Then finally Board issues an Accounting Standards Update describing amendments to the Accounting Standards.

B. Advantages and Shortcomings of the strategy:

Advantages:

1. It takes into account feedback from all the stakeholders.

2. Finds stakeholder needs or difficulties and resolves them.

Disadvantages:

1. Suggestions from all can't be counted because of the number of opinions received.

2. Developing and organizing workshops expensive to make all stakeholders user friendly.