Loft, A. and Fearnley, S., 2002. Global Debate. Accountancy, 129 (1306), pp. 106-107.
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This article reports a debate on suitability of international accounting standards (IAS) in providing a coherent global model for financial reporting, referencing an European Union (EU) regulation on adopting IAS, as of June 2002. This regulation will require all EU listed companies to prepare accounts under IAS, and the conversion process will soon become a practical reality. Graham Ward opened the session of the symposium at the European Accounting Association's 25th Anniversary Congress, with criticism of the variations in financial reporting from country to country which created confusion, encouraged error and facilitated fraud. He argued that sound financial reporting rested on a three-legged stool consisting of international standards of accounting, auditing and ethics, supported by effective enforcement. Discussing the issue of principles versus rules, he came down in favor of principles, as they encouraged compliance and the exercise of professional judgment, whereas rules encouraged avoidance as ways are sought to get round them; financial reporting should reflect truth and fairness, not deception based on technicalities. Following on from the main speakers, Professor Geoffrey Whittington opened the debate by questioning the principles versus rules concept. While as an academic he prefers things to be based on principles, in his role as an International Accounting Standard Board member he is not so sure. Rules have their advantages, in crossing national boundaries they are much easier to translate and are less exposed to cultural or linguistic interpretation, and the easiest way to get uniformity is through rules. This would be the case for the standard for stock-based compensation.
|Subjects:||Social Sciences > Finance and Financial Economics|
|Group:||Business School > Centre for Finance and Risk|
|Deposited By:||INVALID USER|
|Deposited On:||09 Jan 2009 19:03|
|Last Modified:||07 Mar 2013 15:04|
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