Advanced financial accounting Essay Example | Topics and Well Written Essays - 2750 words

Advanced financial accounting - Essay Example With increasing rate of globalization,it is quite essential to introduce required changes in the accounting standards to incorporate international uniformity.Until 2006,different nations had enjoyed the freedom to use distinctive financial accounting standards that best suits the requirement of their local stakeholders. However, with businesses becoming international, the distinction between domestic and foreign stakeholders should be resolved. This can only be possible if uniformity can be introduced in existing accounting standard. Considering such requirement, International Accounting Standards Board (IASB) and Financial Accounting Standards Boards (FASB) had decided to develop a commonly conceptual framework for financial reporting. These two organizations worked hand in hand to develop the discussion paper. In May 2006, they issued the discussion paper as Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Quali tative Characteristics of Decision-useful Financial Reporting Information. The board (IASB & FASB) asked people to provide their suggestion about the conceptual framework. Initially people resisted this proposal because the approach of UK and US financial standards are different from each other. Both these have a different definitional for stewardship. In the given proposal, the concept of stewardship has given second priority that disturbed the investors’ confidence. Considering the response received from different organisations and people, the board (IASB and FASB). After considering the response received from the investors and other bodies, board has published an improved Conceptual Framework for Financial Reporting in form of exposure draft. This draft covers the objectives as well as the qualitative characteristics of financial reporting information. The final version of both Chapter 1 and 2 was formulated by September 2010 and it got finally published in November 2010. While publishing the final version, board has also published the feedback received on exposure draft. In the given easy, the development of proposal given by IASB will be discussed in further details. The responses received by this proposal will also be discussed so that one can understand how and why people criticised the proposal when it was offered by the board. For better understanding, it will be compared with ASB Statement of Principles (1999) to determine what will be the implication of the changes on different stakeholders in US as well as in UK. Development of IASB proposals After considering the changing global business environment, in October 2004, International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) decided to jointly develop a conceptual framework that will be based on existing IASB framework as well as FASB Conceptual Framework (International Accounting Standards Board-a, 2006, p.8). As per the plan, the project would f ocus on concepts that are applicable on business entities operating in the private sector. The plan was to expend the proposal to cover other sectors such as ‘not for profit organisation’ operating in the private sector. The project was to be executed in two segments, at first the board was supposed to develop convergence in the conceptual framework and improving areas like â€Å"objectives, qualitative characteristics, elements, recognition, and measurement† associated with the framework. In the second half, priority would be given to issues that should yield short term benefit to the board. The board decided to formulate and to present the finding in a summarised manner for further discussion (Deloitte Global Services Limited, 2010, â€Å"