International Accounting
The primary goal of the International Accounting Standards is to promote global trade, compare businesses in the world, and create transparency in financial reporting. The International Accounting Standards were first set by the International Accounting Standards Committee in the year 1973 to promote transparency in international trade. The International Accounting Standards were replaced by International Financial Reporting Standards in the years 2001, and they the accounting standards that exist up to date. Comparing accounting standards globally promotes international trade, and increases accountability and transparency in financial markets across the whole world.
Various international factors lead to national differences in accounting necessitating the need for international accounting standards. Accounting differences between countries occur when financial reporting frameworks of one country differ with that of another country (Schaltegger,2017). Economic factors such as economic openness and privatization contribute to accounting diversity. Most countries especially developing countries create economic openness to attract many foreign investors. In the process of creating economic openness, the states change their financial reporting frameworks to meet the needs of foreign investors hence creating accounting diversity. Political factor is a key factor that contributes to accounting differences. The political environment of a country defines the financial reporting systems of that particular state. Developed countries have stable political systems as opposed to developing countries, which results in accounting differences. Environmental factors are the major factors responsible for accounting diversity.
Global standardization of accounting standards results in the standardization of accounting practices in the world. Standardization of accounting practices involves coming up with guidelines and policies that the member states should follow in their accounting procedures (Cazier,2015). Also, global standardization includes coming up with policies that ensure that companies must attain a certain quality level to be involved in the production of certain commodities. As a result, the financial statements of the member countries undergo the same process, and the financial statements are comparable hence ensuring transparency and efficiency in international trade. The same financial reporting framework leads to standardization of accounting practices, which is the primary goal of the global standardization.
Ball suggested that with different economic and political factors in countries that have adopted International Financing Reporting Standards, uniform standards alone cannot produce uniform financial reporting (Billings,2016). Ball comments were based on the fact that economic and political factors of different countries cannot be standardized. Most developing countries do not have political stability within their political systems. However, developed countries have stable political systems that is depicted in their well-established businesses. Also, some developing countries have to change their economic practices as opposed to International Financing Reporting Standards to attract foreign investors, which is opposite to developed countries. Therefore, Ball comments were based on the fact that due to different economic and political environments in different countries, it’s difficult to achieve uniform financial reporting.
The final report by Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was presented to the Governor-General on 1 February 2019. The report had 76 recommendations that required to be implemented (Legg,2019). One of the recommendations suggested that the banking code should be amended to ensure that banks work with customers. The recommendation intended to ensure that customers who live in remote areas and those who are not able to communicate in English can access banking services. I agree with the recommendation because there are inadequate banking facilities for the customers who live in remote areas, and therefore, amendments need to be made to ensure that customers in remote areas can access banking service.