Accounting Standards and Ethics 4
AccountingStandards and Ethics
Financialaccounting standards board (FASB) website is a website set by theorganization in the United States that regulates and formulates rulesthat govern commercial establishments in the United States. TheInternational Financial Reporting Standards website is a website thatis under the IFRS that sets standards that are used to regulatefinancial institutions in certain countries in the world. The tworules differ in various ways. One of the differences is that the FASBis uniquely in the United States while IFRS is a governinginstitution in over 100 countries in the world including the EU.Another difference is that the FASB is a board by itself thatformulates the standards while Internationa Financial ReportingStandards is under the (IASB) International Accounting StandardsBoard which develops the standards. The United States has been usingits standards as compared to the rest of the world.
TheU.S adoption of IFRS would be both advantageous and disadvantageous.Some of the advantages would be in the improvement of comparison offinancial information with other global competitors. Also, companiesin the United States would access foreign markets, and investmentsgave the uniformity in reporting standards. Another advantage wouldbe in the exchange of professional labor given it would be easy forindividuals to work in other countries that are under IFRS standards.Disadvantages also do exist with the U.S migrating to the criteria,one of them being the cost of changing the internal systems to beconsistent with the new standards and costs of training employees.Migration from FASB to IFRS would be an encouragement to monopolizingthe reporting standards field. Monopoly by the IFRS isdisadvantageous in that competition ensures that the standards arereliable.
Manydilemmas are found among accountants globally. Many ethical dilemmasdo exist among accountants given the normal ethical behaviors and thecharacters that the analysts adopt. Institutions usually want to showsound financial performance even during underperforming times andthus would resort to the misstatement of revenues. Working withfamilies also puts employees in compromising situations. Also,conflicts of interests arise when an individual carries out audits ofcompanies whose financial performances have a direct effect on them.At times dilemmas occur in a non-financial situation in the form ofconfidentiality. The need to disclose or not to disclose informationcauses a big dilemma among accountants.
Accountantsall over the world have ethical standards that are used to governtheir actions. With bodies such as the International Ethics StandardsBoard for Accountants, it can be seen that there are ethicalstandards in place that are used in the governance of the activitiesof the profession. Practically, this would be questioned given thebehavior that is seen by many accountants. Personally, I do agreethat there exist standards that govern the ethical behavior ofaccountants. Standards do exist that focus on independence, due care,objectivity and professional conduct. In support of the existence ofstandards and laws, it can be seen that many cases have been taken tocaught based on accounting malpractices. An example is the EnronScandal case where huge debts were not declared on the balance sheet,and there was a misrepresentation. With the prosecution, ethics isbrought to fore given that the individuals had broken the ethicalcode of disclosure of books of accounts (Allen & Bunting, 2016).
Allen,C., & Bunting, R. (2016, 10 31). Retrieved from AICPA IFRSResources:www.ifrs.com/overview/accounting_firms/global_standards.html