Financial statements prepared and presented by a company typically
follow an external standard that specifically guides their
preparation. These standards vary across the globe and are typically
overseen by some combination of the private accounting profession in
that specific nation and the various government regulators. Variations
across countries may be considerable making cross country evaluation
of financial data challenging.
Publicly traded companies typically are subject to the most rigorous
standards. Small and midsize businesses often follow more simplified
standards, plus any specific disclosures required by their specific
lenders and shareholders. Some firms operate on the cash method of
accounting which can often be simple and straight forward. Larger
firms most often operate on an accrual basis.
prescribe in considerable detail what accruals must be made, how the
financial statements are to be presented, and what additional
disclosures are required.
Some important elements that accounting standards cover include:
identifying the exact entity which is reporting, discussing any "going
concern" questions, specifying monetary units, and reporting time
2 Benefits of accounting standards
3 Common accounting standards around the globe
4 Global standardization and IFRS
5 See also
7 Further reading
8 External links
Accounting standards were largely written in the early 21st century.
Massive accounting irregularities at large firms such as
Enron illustrate that despite all these efforts, widespread fraud can
still occur, and even be missed by the outside auditors.
Benefits of accounting standards
The lack of transparent accounting standards in some nations has been
cited as increasing the difficulty of doing business in them. In
particular, the Asian financial meltdown in the late 1990s has been
partially attributed to the lack of detailed accounting standards.
Giant firms in some Asian countries were able to take advantage of
their poorly devised accounting standards to cover up immense debts
and losses, which yielded a collective effect that eventually led the
whole region into financial crisis.
Common accounting standards around the globe
International Financial Reporting Standards
This standard is adopted in whole, or in large part, by many
countries. Its acceptable in the U.S. (for a firm located outside of
the U.S.) to report in this widely accepted format.
Accounting standards by nation
China - Chinese
Accounting Standards (Zhōngguó qǐyè kuàijì
Canada - Generally Accepted
France - Generally Accepted
Accounting Practice (Plan Comptable
Germany - Generally Accepted
Accounting Practice (Grundsätze
India - Indian
Luxembourg - Luxembourg Generally Accepted
Accounting Principles (Lux
Nepal Financial Reporting Standards
Russia - Russian GAAP
United Kingdom - Generally Accepted
Accounting Practice (UK)
United States - Generally Accepted
Accounting Principles (United
States) Domestic firms typically report in this format. Foreign firms
that trade in the U.S. typically report in IFRS format (above).
Global standardization and IFRS
Many countries use or are converging on the International Financial
Reporting Standards (IFRS) that were established and are maintained by
Accounting Standards Board. In some countries, local
accounting principles are applied for regular companies but listed or
large companies must conform to IFRS, so statutory reporting is
All listed and grouped EU companies have been required to use IFRS
Canada moved in 2009, Taiwan in 2013, and other
countries are adopting local versions.
In the United States, while "...the SEC published a statement of
continued support for a single set of high-quality, globally accepted
accounting standards, and acknowledged that IFRS is best positioned to
serve this role..." progress is less evident.
Center for Audit Quality
Center for Audit Quality (CAQ)
Constant item purchasing power accounting
Convention of consistency
Philosophy of accounting
Statutory accounting principles for insurance companies in the US
^ WiseGeek. "What are the Generally Accepted
WiseGeek. Retrieved 9 February 2017.
^ "AcSB Confirms Changeover Date to IFRSs". Canadian Institute of
Chartered Accountants. 13 February 2008. Retrieved 8 August
^ "IFRS accounting measures to take effect for all listed companies in
Taiwan in 2013", Ted Chen, The
China Post, January 1, 2013
^ "New Zealand
International Financial Reporting Standards
International Financial Reporting Standards 2007-2014"
^ "Financial reporting framework in Australia", Deloitte
^ a b "IFRS: Current situation and next steps", pwc.com
^ "New mechanisms eyed by FASB, IASB in long march toward global
comparability", Ken Tysiac January 10, 2013, journalofaccountancy.com
Meeks, Geoff, and GM Peter Swann. "
Accounting standards and the
economics of standards."
Accounting and Business Research 39.3 (2009):
FASAB Handbook of Federal