Essay : Critically assess the relative merits of accounting standards. In your opinion, how would a conceptual framework help to develop accounting standard?

Accounting Standard and Conceptual framework 1
Accounting Standard and Conceptual framework
Accounting Standard and Conceptual framework 2
Introduction:
The accounting of a company is highly influenced by the environment in which it
operates. Countries have different histories, values, cultures, and political and economic systems,
and they are also in various stages of economic development, these are the factors which highly
affects the development as well as the practice of the financial accounting practices of the
country. With these differences the financial accounting standards that are being adopted by
different nations vary significantly.
The financial report of the countries is generally prepared with a motive to help the
primary users of the financial statements. In the past, most users were residents of the same
country as the corporation issuing the financial statements. The emergence of multinational
corporations and organizations such as the European Union (EU), the General Agreement on
Tariffs and Trade (GATT), and the North American Free Trade Agreement (NAFTA) has made
transnational financial reporting more commonplace. Transnational financial reporting requires
users to understand the accounting practices employed by the company, the language of the
country in which the company resides, and the cu
ency used by the corporation to prepare its
financial statements. When an company was wanting to operate at an international level than
then there were several issues that came up which resulted in harmonizing the accounting
standards across the globe. Every country has different standards like in US, the companies
follow GAAP, in Australia AASB is followed as the accounting standard and IFRS is followed
in UK. All these standards helps in
inging into picture a standard accounting and financial
eporting of the companies which helps in analysis and comparability of the financial statements.
Financial Reporting framework:
Objective of financial reporting:
Accounting Standard and Conceptual framework 3
The objective of financial reporting is the first concept statement presented by GAAP
which states that the objective of the financial statement is for general purpose external reporting
i.e. the financial reporting concerns to the external users as well as internal users. The objective
of the financial reporting goes from a general purpose to the more specific purpose.
General Purpose: Information useful in making decision
The general...