What Are The Guidelines For International Accounting

Each country has its own financial framework, hence they practice different general accounting procedures. Although there had been an agreement upon GAAP - Generally  Accepted Accounting Procedures,  each country requires a certain type of financial reporting from accountants. Develop countries prefer the IAS while others still employ the GAAP. Each country has a unique political and social climate which affects the government. The government is mainly responsible for issuing regulatory policies that would provide guidelines for accounting reports and practices.

International accounting exists because the financial transactions of a developed country is more complicated than that of developing nations. Some set of information for one country may not be relevant or applicable in another country's finances. For example, Japan employs a complex form of accounting that even code breakers have a hard time deciphering.History may be a factor in the development of accounting procedures, for instance US adopted the German practice after the war. Nevertheless, there is a need for countries to have a clear guideline for accounting reports that is why the International Accounting Standards have been established.

The IAS contains a set of standards that states how some accounting transactions should be reported and reflected in financial statements. This helps companies that have transactions abroad to consolidate different types of accounting reports. And another thing, by meeting and discussing on a regular basis, countries can use this a starting point of discussion for their financial transactions. The IAS was formerly issued by the Board of the International Accounting Standards Committee (IASC). Later on, a more updated set of standards was  released in 2001 and this is now recognized as the international financial reporting standards. It must be emphasized that IASC provides guidelines for its member countries but cannot impose members to comply with the set standards. It is just an agreement between countries to report in accordance to what has been set by IAS for publicly-traded companies.

Initial knowledge about international accounting can be gained through literary means. By taking advantage of literary materials, one can differentiate the accounting procedures of every country and the extent of involvement by its government with regards to financial reports. International accounting standards and its benefits over GAAP is also explained so readers can compare the advantages of both procedures.