International corporate reporting issues Essay Example | Topics and Well Written Essays - 2250 words

International corporate reporting issues - Essay Example International corporate reporting issues The objective of this standard is to frame the foundation for the presentation of financial statements. The standard is to ensure the compatibility with the company’s financial performance in previous years as well as with that of its competitors. US GAAP is the framework that offers Generally Accepted Accounting Principles, which are used by United States organisations or the companies listed on Wall Street. This set of standards is developed by the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants. The framework is a combination of authoritative standards introduced by the responsible authorities, as well as the accepted ways to carry out accounting and reporting activities. These standards are constructed solely by input of US organisations rather than any outside influences. The key objectives of accounting standards are identification, measurement, and reporting of financial information of the organisational entities to the interested stakeholders. Financial accounting is a process culminating in the preparation of the financial reports of the organisations. These are done for the use of both the internal and external stakeholders. These financial statements include balance sheets, income statements, and statements of the owner’s equity and cash flow situation including assets and expenses. In the United States, the most significant source of influence on accounting standards is politics. The most substantial factor in the political arena is user groups. These groups include the parties most affected by accounting standards, rules, and regulations. â€Å"Accounting standards are as much a product of political action as they are of careful logic or empirical findings† (Wiley, 2002, p.14). These groups of stakeholders require accounts and re ports regarding company finances which are essential to successful business planning and strategizing. Groups know the best way to influence these standards in order to have a more favourable outcome financially is to participate in the framing of those same structures or to try to influence or persuade the authorities more directly responsible for the formulation and amending of the standards. In the US there are many authoritative bodies responsible for the formulation and development of the generally accepted financial standards; FASB is the significant and major contributor in this development. Undoubtedly, the board faces intense amounts of pressure and efforts to incorporate and influence the changes in the present standards and in the development of new ones. Moreover, the situation gets complicated with the involvement of two