Convergence of Accounting Standards - Assignment
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Dublin Business School
Added on 2020-05-28
Convergence of Accounting Standards - Assignment
Dublin Business School
Added on 2020-05-28
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Running head: RESEARCH PROPOSAL Convergence of Accounting Standards is good for the IndustryName of the Student: Name of the University: Author’s Note:
1RESEARCH PROPOSAL Abstract This paper looks to assess the effect of convergence of the accounting standards for themanufacturing industries that are operating in the economy. The proposal has the intension ofcreating a guideline and the action course with the help of which an extensive research can beundertaken on this topic. The proposal initially provides an insight on the explanation ofaccounting standards and the meaning convergence. Thereafter, the background of the studyalong with the rationale for undertaking this research is even explained. The aims and objectivesin accordance to which the research would move forward is even mentioned in this segment ofthe proposal. The literature review on the other hand explains the various concepts and the ideasthat are associated to accounting standards and convergence and what other researchers havesuggested on these aspects. The methodology section of the proposal addresses the process ofdata collection and the kind of data that is suitable in order to complete research on this topic.
2RESEARCH PROPOSAL Table of ContentsChapter 1: Introduction....................................................................................................................41.1 Background of the Study.......................................................................................................61.2 Rationale of the Research......................................................................................................91.3 Research Aims and Objectives..............................................................................................91.4 Research Questions..............................................................................................................101.5 Structure of the Proposal.....................................................................................................10Chapter 2: Literature Review.........................................................................................................122.1 Introduction..........................................................................................................................122.2 Nature of Convergence........................................................................................................122.3 Benefits of convergence of accounting standards...............................................................132.3.1 Network Externalities...................................................................................................132.3.2 Comparability...............................................................................................................142.4 Costs of convergence of accounting standards....................................................................152.5 Empirical Studies.................................................................................................................162.6 Brief history of convergence and accounting standards......................................................172.7 Accounting Standard...........................................................................................................18Chapter 3: Research Methodology................................................................................................203.1 Introduction..........................................................................................................................203.2 Justification for the choice of methodology used................................................................20
3RESEARCH PROPOSAL 3.3 Research Objective..............................................................................................................213.4 Research Philosophy............................................................................................................213.5 Research Approach..............................................................................................................223.6 Research Design..................................................................................................................233.7 Research Strategy................................................................................................................233.8 Data Collection Method.......................................................................................................243.9 Population............................................................................................................................243.10 Sample...............................................................................................................................253.11 Data Analysis Method.......................................................................................................253.12 Ethical Consideration.........................................................................................................263.13 Limitations of the Research...............................................................................................263.13 Gantt chart.........................................................................................................................273.14 Summary of the Methodology...........................................................................................27Reference List................................................................................................................................29Appendix........................................................................................................................................34Questionnaire.............................................................................................................................34
4RESEARCH PROPOSAL Chapter 1: IntroductionThe modern world has various organizations that are operating successfully and areundertaking transactions and communications with other firms in order to sustain theiroperational activities. With the advent of globalization, companies from various parts of theworld have been interacting with each other and have been undertaking transactions in order tomake the business more appropriate and thereby expanding their business. In order to make theworld a worldwide market International Accounting Standard Board (IASB) has constructedvarious accounting standards in order to establish uniformity in the aspect of accounts globally(Chen, Ding and Xu 2014). Accounting is one of the key components with the help of whichindividuals and organizations are able to maintain a record of their financial transactions therebyestablishing their business successfully. The process of convergence refers to the coming together or the explanation of the directrelationship between two trends which can be price or any other indicator. In the current timeperiod with the development of various standards in the global accounting system, there has beena need for undertaking convergence of several accounting standards in order to make it easier forthe international traders and marketers to perform in the global economy. With the advent ofglobalisation, there has been a rise in the level of international trading and in order maintain ahealthy accounting and transactional activities, it is essential to maintain an accounting systemthat would be helpful for both the parties who are undertaking the business. The need is moreextensive in case for the manufacturing industries has they are the one who undertake severalkinds of import and export activities and thereby interact with other organizations from othercountries. The greater focus on convergence is an outcome of the waves of globalization that hasbeen riding along throughout the globe. Most of the organizations are transforming to
5RESEARCH PROPOSAL multinational firms and therefore have their functions and operations in several parts of the worldwith a rise in the subsidiaries franchises and joint ventures. The capital market that is existent invarious continents has become interweaved. The stakeholders and the investors now haveadditional access in the financial market and international organizations than previously(Wang2014). It is essential to maintain the development in the effectiveness of the markets in order tokeep them healthy. Conversely, the major concern has been the existence of different regulatorystandards in many countries for the purpose of financial reporting. Therefore, the interpreting thefinancial statements from one kind to the other is troublesome as it is time consuming and costly.The investors look to be aware of the variations when assessing the international firms and thismisrepresents the consistency and comparability. The financial statements become unusable tothe investors when they are not comparable completely. Therefore, it creates the chance thatinternational investors restrict themselves from undertaking investments in foreign organizationsas they are unable to understand the financial statements of the firm (Oulasvirta 2014). Thesecircumstances can be observed mainly in the manufacturing industries where there have beenseveral kinds of business and financial interactions and thereby it makes it difficult for theorganizations to maintain an accounting statement that will be acceptable in any country. It isdue to this factor that convergence of the accounting standards is crucial in order to make theinvestors satisfied and thereby improve the operational activities of the industries. This proposaltherefore looks to assess the convergence of accounting standard and how it can improve theoperational activities of manufacturing industries as they are the main concern in this researchproposal.
6RESEARCH PROPOSAL 1.1 Background of the StudyThe proposal concentrates on the convergence of the accounting standards that areexistent in the global economy and how it has an impact on the manufacturing industries. Theprocess of convergence and harmonisation explains the application of various approaches for thepurpose of accounting for the purpose of integration among the accounting methods.Harmonisation addresses the similar accounting policies incorporated by the organizations allover the globe (Tschopp and Nastanski 2014). The rate of adoption of any sort of policies in theprocess of accounting increases, the convergence of the accounting policies rises. The examination of the origin of the differences among the accounting standards invarious countries is essential prior to the explanation of convergence. Political factors are the keyreason for the differences in the accounting standards in various countries. For instance,Germany and France always had significant influence on the regulations of accounting. Thegovernment of the country was hugely concerned about safeguarding the creditors and henceaccounting standards that have been constructed is based on the historic cost and that looked tominimise the assets and profits (Bushman 2014).In countries like USA and United Kingdom, the independent accounting boards areaccountable for the regulations with the focus on the protection of the investors. Conversely,there has been numerous studies that have addressed that cultural factors have influenced thedifferences among the national standards of accounting (Apergis, Christou and Miller 2014). Thestudies have explained that differences in the accounting standard is unavoidable as they areexistent in different environment and answer to different directives and is an outcome of thevarious standard constructing processes and structures.
7RESEARCH PROPOSAL The method of convergence is a significant challenge and the success of convergence isdependent on the relentless compromise among the key accounting standard boards. The firststep towards convergence was undertaken by the European Union. In the year 2001, theEuropean Commission declared a regulation that the companies that are listed within theEuropean Union had to incorporate the international standards for the consolidated financialstatements(Carraher 2014). This was an answer to the capital market of the European Unionlosing their competitiveness as many organizations thought if undertaking investments in thecapital market of USA as the capital market of the country is integrated and larger. There arevarious countries globally who have incorporated the use of the international standards. Themain aim of convergence has not been to accomplish similar statements but look to attaincompatible statements where there are no deviations on how to account for similar transactions. In spite of the various issues that have been faced by the convergence project, there havebeen key achievements that have been attained. One of the key achievements for convergencewas the developments made in association to the accounting of goodwill (De Simone 2016).IASB even changed their IAS 22 with IAS 36 that restricted the goodwill amortization. Thistransformation aligned the international standard towards goodwill more relatively with theSFAS 141 of FASB with respect to which the goodwill is examined frequently for impairmentand losses in impairment is identified in the same manner.The other instance that wasobservable has been that the conceptual framework that is available in USA and IFRS are quitesimilar and therefore has been converging with the existing efforts by the FASB and the IFRS. InUS GAAP, the conceptual framework is just a guide for the standard setters in disseminating thestandards of accounting. In IFRS, the conceptual model is not utilised as a guide for creating thestandards but even provides a foundation for the practitioners to undertake judgments related to
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