Accounting
and information disclosure practices are influenced by a variety of economic,
social and political factors. They are nature of enterprise ownership, the business
activities of the enterprise, sources of finance and stage of development of capital
markets, the state of accounting education and research, the nature of political
system, the social climate, the stage of economic growth and development, the
rate of inflation, the nature of legal systems, and the accounting regulation.
At each country level, the nature of accounting largely depends upon the relative
influence of these factors and established patterns of accounting system. The
development of technology, globalization of business, effect of liberalization
and free-flow of capital across countries has attracted investors, corporate,
strategic business partners. Hence the role of accounting in dissemination of
financial information becomes very much significant in providing qualitative characteristics
of financial statements like, understandability, relevance, materiality and reliability
over faithful representation, substance over form, global financial reporting
to standardize accounting methods, procedures, treatments and policies globally.
This helps to lay down the principles of preparation and presentation of financial
statement uniformly in the world over to suit the needs of a diverse audience,
to establish benchmark for evaluating the quality of earnings and reporting internationality,
and to ensure that international community of users of financial statements get
creditable financial information.
The
uniformity in accounting procedures, policies and practices is the solution in
the world of harmonization process for better accessibility among the various
stakeholders across the globe. Uniform system of accounting process remains a
matter of discussion since 1911, after the introduction of this concept by the
Federation of Master Printers, which is subsequently developed by various industries.
The development of information technology has strengthened the use of uniform
system of accounting practices in successive years of standardization. The introduction
of new economy in the late 1990s forced decision-makers to prepare for reorientation
of uniform system of accounting to consider the dominance of value drivers associated
with non-financial information sets. The reporting framework has been charged
in the reformed era. International Financial Reporting Standards (IFRS) and US
GAAP has adopted joint effort for convergence of accounting practices from 2005
for better information dissemination to the interested users within the accounting
principles. |
