Accounting Theory Report: Standards, IFRS and IASB

This report delves into the core concepts of accounting theory, emphasizing the significance of accounting standards and their role in ensuring transparency and eliminating fraudulent activities within a business. It explores the International Accounting Standards Board (IASB), its functions, and its impact on developing and approving International Financial Reporting Standards (IFRS). The report highlights the differences between IFRS and Generally Accepted Accounting Principles (GAAP), discussing the benefits of adopting IFRS for consistent accounting practices. It further examines the IASB's role in maintaining financial information accuracy and quality, and its impact on financial reporting. The report also addresses the importance of national standard setters and the value of international accounting standards in enhancing financial stability and transparency.

Running head: ACCOUNTING THEORY
Accounting Theory
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Table of Contents
In response to Question 1...........................................................................................................2
In response to Question 2...........................................................................................................2
In response to Question 3...........................................................................................................3
In response to Question 4...........................................................................................................4

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In response to Question 1
Accounting Standards are referred to as the set of norms, procedures and techniques
which further defines the accounting practices and policies. In every business, accounting
standards plays a significant role and it should be set based on the financial objectives of the
firm. Accounting standards in the business further improves the transparency in the financial
statement of the country. Generally accepted accounting principle is the principle which is
applied by many business and is considered as the widely accepted for the purpose of
preparing the financial statements (Ji 2017).
Accounting standards should be set in order to eliminate any kind of fraudulent
activities within the system. Setting the accounting standards will enhance the overall
business prospect and the financial aspects of the firm will further improve by following the
set of standards. Following the standards are significant in order to minimize the risks
associated and the chances of errors in the business of the company (Macuda, Matuszak and
Różańska 2015).
In response to Question 2
The International Accounting Standards Board or (IASB) is referred to as the private
sector body considered as independent which develops and approved by the International
Financial Reporting Standard (IFRSs). The approach is currently taken by the IASB due to
the roles which are adopted by the IFRS foundation which includes the full option in
developing the technical agenda which is accustomed as per the requirement of the public and
trustees, the preparation of the drafts included in the IFRS are further specified in the
constitution. Further the issuing and approval of interpretation is developed by the Committee
of the IFRS.

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The purpose of the IFRS is to bring consistency in the accounting practices,
languages, business and investors in order to educate the financial analysis and the decision
taken by the organization. The foundation of the IFRS sets the standards which further deals
with the accountability, transparency and efficiency in the financial stability of the firm. Most
of the organizations are benefited from the foundation of the IFRS as the business practices
of the company is quite very transparent in that case (Jones 2015). The activities surrounded
by the IFRS consists many of the business practices which are the statement of the financial
position, statement of the comprehensive income, statements regarding the change in equity
and the statement of cash flow. The above discussed elements are essential for setting
standards as per the requirements of the IFRS of the firms (Kaplan and Atkinson 2015).
The difference between the IFRS and the generally accepted accounting principle is
that it affects the way financial ratio is evaluated. The requirements of the IFRS is quite
different compared to the other rules and regulations attached to the system. Hence, it is can
be said that as there are many similarities with the system, it is quite effective to accept the
current standards which is set by the IFRS as an appropriate approach in the accounting
process (Bedford and Ziegler 2016).
In response to Question 3
If the IASB concludes the economic consequences of the standard it is about to
approve will further be the disadvantage of the powerful lobby group. The following steps
which must be undertaken as per the guidelines listed in the IFRS which are as follows:
 IFRS helps to get rid out from such kind of consequences by help the institution in
maintaining the accuracy, comprehensiveness and financial information system. The
information’s of the financial statement is basically derived from the sources of the

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IFRS. This further leads to the valuation of the equity markets along with that lowers
the risks associated with the potential investors (Coad, Jack and Kholeif 2016).
 It is needed to enhance the financial reporting quality of the by the process of
maintaining a uniform standard in order to compete with the tough competitors.
 IFRS eliminates the adjustments related to the financial statements of the company
and further adopts the strategy to reduce the cost processing the financial
information’s.
 Accounting standards further provides assistance regarding the reduction of the
international differences of the cross-border acquisition and the divestitures (Breton
2018).
In response to Question 4
The statement mainly deals with the statement which is that “We should disband the
national standard setters. They are of no use following the adoption of the international
accounting standard”. The international accounting standard must note be disband and if
there lies any glitches in the internal policies and procedures then the certain cases must be
identified and changes in that case if required must be made for enhancing the overall
accounting standard system. Each and every large organizations follows the rules and
regulation set up by the board of the international accounting standard (Christensen et al.
2016).
The international accounting standards are the set of principles which are the followed
by the small and the large firms in the industry. The IASB solves all the technical related
problems in the internal management system of the country. The transparency in the
accounting system, accountability and efficiency related to the financial markets of the
organization. Actually high quality is set in the accounting standards which is quite

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understandable, enforceable and further it is also globally accepted as per the International
Financial Reporting Standards.
Adopting this strategies further strengthen the financial status of the firm and it
further eliminates the fraudulent acts associated in the business. It is significant in order to
apply the fundamental of the IASB to make the accounting of the firm far more effective and
sharp in every accounting aspects.
References
Bedford, N.M. and Ziegler, R.E., 2016. The contributions of AC Littleton to accounting
thought and practice. Memorial Articles for 20th Century American Accounting Leaders, 49,
p.219.
Breton, G., 2018. A Postmodern Accounting Theory. Emerald Publishing Limited.
Christensen, H.B., Nikolaev, V.V. and Wittenberg‐Moerman, R., 2016. Accounting
information in financial contracting: The incomplete contract theory perspective. Journal of
accounting research, 54(2), pp.397-435.
Coad, A., Jack, L. and Kholeif, A., 2016. Strong structuration theory in accounting research.
Accounting, auditing & accountability journal, 29(7), pp.1138-1144.
Ji, X.D., 2017. Development of accounting and auditing systems in China. Routledge.
Jones, S. ed., 2015. The Routledge companion to financial accounting theory. Routledge.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

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Macuda, M., Matuszak, Ł. and Różańska, E., 2015. The concept of CSR in accounting theory
and practice in Poland: an empirical study. Zeszyty Teoretyczne Rachunkowosci, 84(140).

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