Issues in Contemporary Accounting: Global Standard Implementation

This report delves into the complex issues surrounding the implementation of a single set of accounting standards worldwide. It begins by arguing for the benefits of such a system, including improved access to financial information for investors, enhanced comparability of financial statements, and facilitation of cross-border alliances. The report then critically examines the challenges, such as legal and regulatory differences between countries, integration difficulties, potential adverse effects on small businesses, and international sovereignty concerns. Using the concept of institutional theory, the report assesses the feasibility of the IASB's goal of a single set of accounting standards. The report also examines the role of the IASB in the implementation of the system. The report concludes with a summary of the key findings and arguments.

Issues in Contemporary Accounting 1
ISSUES IN CONTEMPORARY ACCOUNTING
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Table of Contents
Introduction.................................................................................................................................................3
Research Question one................................................................................................................................4
Investigative report arguing for a single set of accounting standards for the worldwide use...................4
Research Question 2....................................................................................................................................7
Prepare an investigative report critically outlining challenges facing having a single set of accounting
standards for world-wide use...................................................................................................................7
Legal and regulation differences..........................................................................................................7
Integration challenges..........................................................................................................................8
Adverse effects from the small businesses...........................................................................................8
International sovereignty challenges....................................................................................................8
Research Question three.............................................................................................................................9
Using the concept of the institutional theory you learned in Week 2 topic, prepare a research report on
whether IASB’s goal of having a single or set of accounting standards for worldwide use is feasible....9
The common Accounting Standards enabling free movement of the goods......................................10
Conclusion /Summary...............................................................................................................................11
References.................................................................................................................................................13

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ISSUES IN CONTEMPORARY ACCOUNTING
Introduction
The research is about the issues in the contemporary accounting of the Single set of
accounting standards in the worldwide. An effort is underway to change the trend in which the
financial and management information is received globally. For this reason, there is need to shift
the method of the process and form a uniform system call the single standard methods which are
recognized globally. The process is facilitated by the Standard setter, e.g., IASB; in providing the
policy and the international convergence and harmonizations. The report will deeply investigate
the information on the single set standards including the challenges that may be faced out of this
new system (Hodgdon, Tondkar, Adhikari and Harless 2009). The report also investigates the
roles of the IASB in the implementation of the system to the worldwide set. The idea of the
whole set is being spearheaded by the London based agency called the International Accounting
Standards Board (IASB). The proposed system should be one with comparability and the
uniformity in its function. The paper will critically look at the aspect of the system ranging from
the literature point of view to the challenges that will be incurred in its implementation. The
literature will be the source of information for the report. The single set standards is aiming at
working with other already set standards to form a uniform standard which provides the high-
quality standard that is globally accepted. The joint system is perfect for joint business but
sometimes not accepted by a number of the member states.

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Research Question one
Investigative report arguing for a single set of accounting standards for the worldwide use
A single set of accounting standards is considered as one of the approaches to the
problems associated with the accounting globally. For this reason, the IASB is in the front line
for its formation and functionality (Botzem 2012). Different accounting failures have been
witnessed globally. The United States of America and the United Kingdom were the first victims
of the financial challenges. Later in the year 2002, the corporate scandals on the accounting
around the world have been strengthening the call for the formation of a single set of the
accounting standards which will be used globally. It is believed that by an adopting the system,
receiving the information on financial issues will be easy (Leuz 2010). The standards will also
provide for the uniformity, and the quality of the service will as well be improved. There is some
arguments concerning the establishment of the single set of accounting standards. The arguments
are critically examined as stated below.
Through the formation of the Single set of accounting standards, the investors will be
able to access the financial transaction from all the headquarters from whichever the location
they will be. In addition to this, the investors can understand and have a comparison of the
different company’s financial statements. This may be achieved from the respective headquarters
irrespective of the private placement of the investor (Chen, Tang, Jiang and Lin 2010). The
investors can expand on their profiles because they will be able to have a more significant
fraction of the foreign securities. It is also argued that through the Single set of accounting
standards, the countries can form a cross-border alliance among themselves. The two known
standard setters that are the Financial Accounting Standards and the International Accountancy

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Standard Board is believed to have announced their intention of having a single standard by
2005. They agreed upon the formation of the single standard; they will not be able to coexist. But
the body will be internally recognized and its functionality (Judge, Li and Pinsker 2010). It is
still not clear whether the standard setters will be able to operate jointly. But through the set
international standards and policies, the joint body is argued to be beneficial to the member
states.
By coming with a common standard, the investors will be able to enjoy quality service.
This is because of the competition that will exist between the joint and the already existing
standards. Some scholars argued that through the formation of a joint standard it is like proving
both the difficulties and impossibilities (Rezaee, Smith and Szendi 2010). That is, the system
may allow for the exchange of among the countries with minimum procedures and the import
duties that may arise. In the normal condition, the standard setters possess the stronger market
based on the incentives to respond to the pressure. The pressure may be caused by the need of
achieving the uniformity by the concern standard setters. Under the normal condition, it would
not be possible for the two standards to offers uniformity in the service delivery. But due to the
pressure from the investors, the standard setters will be able to give the financial information in
the way; and the financial comparison is also possible out of this (Holthausen 2009).
The single set of accounting standards is very beneficial mostly to the investors than the
existing standard setters. Through the formation of the joint body, there is a possibility of the
comparability. The investors can compare the financial statement of different countries from one
country. Before the formation, the investor was able to harmonize the two standards to make the
comparison (Li 2010). By evaluating the creditworthiness of the two companies, the difference
in the accounting standards will make the companies have different economic status even if they

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are similar in the financial statement. By using the single set of accounting standards, the global
accounting would have the comparison of the companies. This will make the small business
owners in the evaluation of the international options in both the investment and the financial
management (Burnett and Murphy 2014). If there is a comparison of the country’s financial
statements, the business owners would be able to complete more of their rights within the region.
A new set of the standards allow for the international expansion. It eases the barriers
related to the expansion of companies. For example, if a company is expanding internationally,
they have to consider the global cost and the compliance (O'neil 2015). That is adopting the
complete requirements of the accounting records that meet the new standards. The new joint
system is not popular with the individual accounting standards because of lack of independence.
Migrating from one system to another is sometimes characterized by rejections from the former
directors of the already dissolved companies (Botzem and Dobusch 2012).
A single set of accounting standards is the general way of coming up with the rules that
govern the financial statement. The set principles are always regarded as the General Accounting
Acceptance Principles (GAAP). Accounting standards are a code of conduct that is set by the
regulatory setters to govern the financial statements globally. They are sometimes agreed up by
the accountants from the individual nations (De Simone 2016). A single set of accounting
standards have been considered very useful to the international standards. However, there are
some challenges experienced to its full implementation. The system has been considered very
useful for the harmonization of the international financial standards. Despite that, there are some
challenges facing it (Zeff 2010). The challenges faced have been brought between the member
countries by use of International Financial Reporting Standards (IFRP) and the United States
GAAP. The problems have been caused due to some factors such as: different in tax laws from

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individual countries, legal requirements, diversity of the culture and the difference in financial
conditions. Some of these factors have contributed a lot to the adoption of the system. When
talking about the single set standards, we must consider both the International Accounting
Standard Board and the Financial Accounting Board based in the United States because they are
considered the standard setters for the accounting standards (Malsch 2013).
Research Question 2
Prepare an investigative report critically outlining challenges facing having a single set of
accounting standards for world-wide use
One of the significant challenges is the lack of workforce. A single set of accounting
standards is faced with the problem of manpower during the shifting process. Training of new
personnel to adapt the new international accounting standards is sometimes expensive and time
costs. Most countries would rather maintain their previous accounting rules than enter into a new
system which may be considered costly (Iatridis 2010). The new system requires some personnel
in almost all the departments to meet the international standards. Some of the challenges include
the following:
Legal and regulation differences
The legal requirements on international accounting may differ from one country to
another. For example in India, the legal requirements vary with the IFRS. In India, both the
companies Act of 1956 and the Bank regulatory Act of 1949 and other regulations gave the
detailed prescription of the guidelines to be followed. This would cause much difference with the
requirement of the IFRS in India (Shortridge and Smith 2009). And this becomes a challenge in
the implementation of the single set of accounting requirements.

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Integration challenges
Some of the countries have resisted in the changing from their accounting systems to
International Accounting systems (IAS). This is due to the complexity. Examples of these
countries include England, Canada, United States and Japan. The same integration challenges
make it difficult to change from the GAAP to the IAS. The changing to IAS means that the
countries must also change their internal taxation law (Arner and Taylor 2009). This is not easy
for them at the first stage of the joint accounting system. During the Internal Revenue Service
Tax codes, the companies are to use the Modified Accelerated Cost Recovery system for the
depreciating assets rather than the straight depreciating method that is used in GAAP.
Adverse effects from the small businesses
Small business is experiencing the tight competition from large multinational companies.
During the payment, the small companies pay a lot of compliance regulators. The small-scale
companies believe that by entering into the joint Accounting System, they will be paying
additional tax from what they have been paying (Shortridge and Smith 2009). The problem is
mostly faced by most of the small-scale business in the United States of America. These
additional costs harm the companies and interfere with the growth and expansion of the small
companies. Challenges integration to the accounting standards will make the small companies
incur additional costs during the tax compliance.
International sovereignty challenges
All the countries enjoy their sovereignty. They have the specific security laws, Banking
laws and the financial accounting which govern the principles. Most of the countries do not wish
to abandon their standards because of the new standards (Iatridis 2010). Therefore adopting the

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international standard laws would bring the conflict to the rights of the other states. This become
one of the challenges that face the full implementation of the Single Set of Accounting
Standards. Lastly, the licensing and enforcement is also a significant challenge that affects the
application (Malsch 2013).
Research Question three
Using the concept of the institutional theory you learned in Week 2 topic, prepare a research
report on whether IASB’s goal of having a single or set of accounting standards for worldwide
use is feasible.
The institutional theory is critical tools in the organizations. It provides the complex
views of the organizations. The theories operate under the normative pressures which may arise
from the States or the companies themselves. These pressures may lead the company to be
guided by the professional standards which may lead it to the performance of the task (Zeff
2010). The theory is very important because it provides alternative ways to the acceptance of the
new system in an organization or companies. Some of them develop from external pressures to
the full adoption of the rules. The International Accounting Standard Board's goal is justified for
the formation of the Single Set of Accounting Standards. With the help of the institutional
theories, the following supports the justification (De Simone 2016). Due to the increase in the
foreign companies, the policy setters have decided to harmonize all the financial and accounting
related issues. This will help the cross-border relationship among the investors. Through the
common accounting standards, the corporations and borrowers can think beyond their home
country for the access to capital.

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Another goal for the International Accounting Standard Board (IASB) was to have a
common financial reporting framework. To achieve this , the standard setters must design and
harmonize policies on the Accounting Standards which will be internationally accepted by the
investors (Botzem and Dobusch 2012). The common Accounting standards may force the
individual States and countries to change their financial policies to adopt the new international
standard. The transition may later become law in the member states.
The proposed goal by the IASB was to come up with the international Accounting
Standards which are easy to interpret and applied by the member states. The individual nations
were to comply with the laws and standards which is understandable and easy to interpret (O'neil
2015). These may include the high-quality Auditing and Accounting Standards that are accepted
globally. The effective Auditing firms with the worldwide outlook, qualified personnel to offer
training and finally the active oversight regulatory systems. The formation of the joint
accounting standards has enabled for the international expansion. The individual countries can
enjoy the incentives associated with the international issues (Burnett and Murphy 2014).
The common Accounting Standards enabling free movement of the goods
The policies that are established by the Standard setters sometimes differ from country to
country. The individual train Accountants should always train the respective nations to have a
common and acceptable Accounting Codes.
The Single set Accounting Standards improved the quality of service on the accounting.
It enhances completion. The completion existed between the newly formed joint Standards and
the other existing standards. The formation was to enable the Standard setters to come up with

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fully trained personnel that will be able to prepare the individual staff from individual nations (Li
2010).
The idea for the formation of the joint Accounting standard body was to have a central
authority Body. In a policy-making, having a single set of worldwide accounting standards was
to have the rules under one agency. For example in the current states, accounting standards are
still under different nations with the different standards (Holthausen 2009). One set of measure is
considered the best because it will reduce the challenge of disagreement among the countries on
accounting matters. Apart from lowering the controversy, it was also intended to harmonize the
international standards of accounting which may end up cutting cost. Like in some countries the
businessmen are required to pay some fees that are used in funding those Standard setting bodies.
But this become expensive than having one standard body (Rezaee, Smith and Szendi 2010).
This cost sometimes doesn't affect large companies; the small business suffers a lot. Sometimes
operating accounting under one body is essential to the small business. This because the funding
of the harmonized body will be done by the member countries on their behalves (Judge, Li and
Pinsker 2010). The single set of accounting standards is very essential globally. Its existence is
key to the unity and harmonization of the member states regarding international trade. The
accessibility of the different countries financial statements is also simple. Finally, the main
intention was to reduce and ease the barriers during the cross-border.
Conclusion /Summary
The migration from the old systems to the Single Set of Accounting Standard has
facilitated the international relations among the countries. From the above report, solutions to the
challenges of the joint accounting Standards should be identified to allow the smooth

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implementation of the system. International Accounting Standard Board has played a lot in
enhancing the international standards in accounting. The joint Accounting Standards is accepted
by most of the member nations, but this is affected by some international relation issues such as
license and regulations, international Sovereignty, negative effects from small businesses among
others. By use of the Institutional theories, the IASB has some goals that justify the feasibility of
the formation of a Single set of Accounting Standards. Finally, with the full implementation of
this new system, the international fraud on accountancy will come to an end. This is because of
the good Standards and policies that have been set. The small business investors should also be
protected from the problems associated with the new set.