Benefits of Having International Accounting Standards Essay
Comparability is an accounting principle. The fundamental accounting reports need to be reliable; if they are not reliable it is not comparable. If the company cannot make a comparison then the accounts come impaired. For example, the Financial Accounting …show more content…
There are many reasons for national differences, for example, the Legal systems, language and the tax system.
There are two legal systems, one is Common law and one is Roman law. The legal system has a major impact in which way the accounting and financial reporting are regulated. UK, USA and many other countries follow the Common law, which is based on case law rather than detailed rules. The case law is more flexible and the decision of the court is more important than what the law says. Regulations of the Companies Act 1981 should not be applied if in judgment as this would result in financial statements not showing a true and fair view. The continental Europe and Japan pursue the Roman law which is a code of detailed rules. These rules are more restrictive in the preparation of financial statements, in other words, you cannot do it if it is not allowed.
The Legal system makes it difficult to obtain international agreement because a true and fair view is a UK concept, much of Europe does not understand the concept of true and fair view, and hence why Europe has not implemented this concept.
Language can be an influence in the colonies as they tend to follow their mother countries. For Example, the British colonies pursue the British legal system. Other countries who want to use other languages do not adopt the international standards because they are famous for