Abstract:Global financial reporting is experiencing a “credibility crisis” due to concerns about the quality of reporting of financial results by corporations, which has been eroding in the rush to meet market...Global financial reporting is experiencing a “credibility crisis” due to concerns about the quality of reporting of financial results by corporations, which has been eroding in the rush to meet market expectations. This controversy highlights the need to examine the increasing expectation of ‘harmonisation’ by stock exchanges around the world, companies seeking global capital flows and the financial statement users. Meanwhile, securities regulators attempt to redefine their accounting standards, to cater for a global audience, without compromising market stability. The central question of this essay is whether Australian accounting standards are going to continue to exist in the future or not, given the current global changes that have prompted market and accounting regulators to find ways of addressing this problem. One such solution is adopting international accounting standards, which would enable foreign companies to list on domestic stock markets without the need for translating their accounts to comply with domestic rules. A number of arguments were raised as to whether to use international accounting standards or not. These include economic arguments, which are related to investors, stock exchanges, regulators and domestic companies. This is a contentious issue especially with the changing role of the IASC from one of developing basic standards in 1992, to a ‘pre-eminent’ international standard setter. Day (1997:p10) poses the question: “is it possible to become the leading standards setter in such a short period?” especially, when you are ‘competing in producing standards’ against the United States, whose standards are recognised as the world’s best practice? Australia has embraced a pragmatic approach with its view to harmonisation, as a step toward financial reporting ‘nirvana’ and not the destination itself. This view is in agreement with that of the International Accounting Standards Committee (IASC), which recognises the importance of a working partnership with domestic standards setters. Naturally, the United States global political weight is decisive and its intended role in the harmonisation process is subversive if it replaces the IASC structure with that of its own Financial Accounting Standards Board (FASB) as the global standards setter. This pressure is resulting in a loss of confidence in the harmonisation landscape for it is uncertain for domestic standards setters whether Australian standards will co-exist and/or should comply with either US standards or international standards in the future.Read More
Publication Year: 2000
Publication Date: 2000-01-01
Language: en
Type: preprint
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Cited By Count: 4
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