International Trade Standards

By Author: Sherry Roberts
Total Articles: 81
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There are various reasons why the study of international accounting is still important despite the wide adoption of the IFRS
International variations in IFRS adoption
International variations in IFRS adoption necessitate the critical role of international accounting. The degree to which financial reporting remains different varies by country that have apparently adopted International Financial Reporting Standards (IFRS). The differences between countries can be seen in the degree to which IFRS has been mandated for particular firms or types of reporting, and the degree to which the practice is different along national lines. The difference in the International financial reporting creates problems for analyst and users of financial information when they require assessing companies on a comparative basis. In some countries, IFRS are not required or allowed for domestic reporters. Some countries only require only public companies to fully adopt the standards in their reporting. The significant difference revealed between countries and companies call for the application of international accounting. This way, it is possible ...
... to reconcile the difference in standards of reporting to enable comparison in financial statements.
Gaps in IFRS
The Gaps in IFRS gives reporting entities the room to maneuver which results in differences in practice. One example of gaps in reporting resulted from accounting for insurance contracts the 2005 and 2006. Despite the IFRS 4 addressing the gaps, a number of areas are left unresolved. The IFRS 4 (13) further allows entities to exempt from the requirements of IAS 8 on grounds of policy choice. Another example of the gap was the 2005 oil and gas exploration, for the reason that IFRS 6 did not apply until 2006. Such gaps require interpretation and reconciliation by experts in international accounting to help analysts and users of financial reports to make right decisions based on the financial statements. International accounting can address the gaps that exist.
Different translations of IFRS/language
The differences that result from the translation of IFRS require to be addressed by international accounting experts. The process of translation poses the risk that various items change or adopt different meanings from the original version. Various translations of IFRS into other languages have legal status in their respective countries. One of the notable changes from the original version is the IAS 7 on cash flow statements. The term 'cash and cash equivalents' is defined as including an investment that has a short maturity of, say, three months. The Portuguese version does not include the word “say.” it is, therefore, easy to successfully argue that an investment in just over three months is a cash equivalent when using the English version. The Portuguese version is accurate given that it omits the word “say.” The inaccurate translation can be regarded as an improvement in the standard. The difference in translation means a difference in considerations of what constitutes a cash equivalent in the countries that apply the two standards. (Nobes, 2013) This calls for the application of international accounting services when comparing and interpreting financial statements prepared using the two versions.
Different versions and practices in different countries.
There are various versions of IFRS. Some countries use the IASB-IFRS version while others use the EU version of IFRS. International differences in IFRS at a particular date can, therefore, occur as a result of the adoption of IFRS by different countries. The variation in IFRS practices in different countries makes it difficult to compare the financial statements of companies prepared in two different countries. The random scope of exercise by companies causes systematic country-based differences in practice. Additionally, some countries continue to follow their own individual pre-IFRS national practices. The US, for example, has followed US GAAP standards of reporting which vary with the IFRS requirements. The difference in versions and practices, as seen in different countries, require international accounting to help in the comparison of financial statements prepared under different versions and practices.
Monitoring and enforcement
The difference in compliance with the IFRS influences the comparability of financial statements of different reporting entities. Countries practice different levels of enforcement of the IFRS. The levels of enforcement determine the degree of compliance with the standards. For example, in the past, German companies showed little compliance with the financial reporting standards.

Sherry Roberts is the author of this paper. A senior editor at Melda Research in research paper writing service. If you need a similar paper you can place your order for a custom research paper from online research paper help services