Comparative Financial Reporting Essay Example | Topics and Well Written Essays - 3000 words

Comparative Financial Reporting - Essay ExampleMaterial misstatements atomic number 18 misstatements that can affect users decisions on the financial statements of a company. The auditor may either issue an unmodified opinion (when the financial statements are not materially misstated or a modified opinion (when the financial statements are materially misstated). (McMeeking, 2006). This paper examines contemporary issues between International Financial Reporting IFRS and the Generally Accepted score Principles GAAP.The IASB / FASB project on revising the conceptual Framework has take away substance over form. (IASB / FASB May 2008, Exposure Draft, Conceptual framework for Financial Reporting ) . The explanation is BC2.19. The Boards concluded that faithful commission means that financial describe information represent the substance of an economic phenomenon rather than solely its legal form. To represent legal form that differs from the economic substance of the underlying eco nomic phenomenon could not result in a faithful representation. Accordingly, the proposed framework does not identify substance over form as a component of faithful representation because to do so would be redundant.However, the fair value view assumes that market are relatively perfect and complete and that in such a picture financial reports should satisfy both the interest of passive investors and creditors by stating a current value derived from the current market prices. An alternative view to this doctrine assumes that markets are imperfect and incomplete and that in such a market settings, monitoring requirements of shareholders should be catered for. To conclude therefore, in the words of Whittington (2007), the practical supports of two views is unrealistic as in a realistic market setting the search for a universal measurement order may be fruitless. According to Whittington (2007), a much appropriate approach to the measurement problem might be to define a clear measur ement objective and to select the measurement that best run into the objective.1. 2.0 Identify and comment on what you regard as the 4 most significant accounting policy differences between IFRSs and US GAAP (200 words)International Accounting Standards (IAS/IFRS) are a set of accounting standards promulgated by the International Accounting Standards committee (IASC) and intended to be used as a innovation for cross-border capital raising and listing in global financial markets. (Asbaugh, 2001). The main goal of the International set of Accounting Standards is to standardise the financial and accounting method disclosures of firms in different nations. That is, if firms follow the same set of accounting standards, their external financial reports will provide more(prenominal) uniform disclosures and thus investors would make more use of the variables inherent in the financial statements. (Asbaugh, 2001). Also, firms and investors would benefit from financial statements prepared following an international set of accounting standards. (Asbaugh, 2001).In meeting with the above objectives, the European Union issued regulation 1606/2002 of July 19, 2002 requiring that all companies listed in the European Union and European listed companies in other countries to adopt international accounting standards in their Financial statements from initiative January 2005 onwards. The regulation also gave member states the