Comparison of accounting ethics
Accounting ethics is a code of principles that govern the accountants in their job of accounting. Due to the increase in professionals performing the job, the need for quality services for Accounting is maintained by accounting ethics. This article compares different accounting ethics as set by the International federation of Accountants (IFAC) and the Code of Ethics for professional accountants (AICPA), referred to as the IESBA and AICPA codes in the article.
For good performance of accountants, there must be set code of standards that every accountant is to work within. Although every accounting firm may have its code of ethics, it is vital familiarize itself with the international ethics standards board for accountants (IESBA), Code of professional accountants (AICPA) as well as international federation of Accountants (IFAC). These codes of ethics or standards govern accountancy worldwide
IESBA is responsible for putting in place accounting profession standards globally. This code revision and was updated in 2009, making clarity on requirements for accountants and build up requirements on independence. This code took effect5 from January 2011, permitting earlier adoption.
The two codes has a similarity in that, they give a similar result when right patter has been followed. Both codes point on areas like, due care, truthful information reporting, independence and confidentiality. The two has difference drafting conventions as well as formatting approaches.
Accounting professionals are expected to adhere to IESBA Principles and at the same time apply use conceptual framework means in determining their level of compliance with these principles. AICPPA on the other hand only calls for its members for use of the conceptual framework if specific rules do not touch their condition. IESBA also explains independence issues and rules that do not confer with AICPA. IESBA in another aspect imposes extra independence provisions like Public interest entities unlike (PIEs) AICPA that does not hold same provisions but having rules that are more restricting to their work, which would bring same results as the PIEs for IESBA.
To improve on their rules, AICPA In 2008 initiated a Project for codification of their ethics to enhance as well as reformat the literature of their rules. This was aimed at improving the code through designing it to be more topical, familiar, and easier to use.
Conclusion
Despite more differences on the two Ethics codes on the approaches, their results are similarly arrived at. IEBSA code is involved with more and complicated rules that AICPA. ICPA improvement should continue to make sure that accountancy professionals under the code could also handle the IEBSA code.
The road for IFRS towards its implementation
IFRS is an abbreviation for international financial reporting standards. This article determines the history and advancement of IFRS towards its implementation.
The intention of IFRS adoption was announced in 2008 by (SEC) Securities and Exchange Commission and standard change was proposed by 2014 if there would be fulfillments. This had good plans and intentions but the process was very low. In December 2010 the deadline for was pushed to 2011 after no good results had turned when the SEC set and approved 2015 as the year for the IFRS to start effectiveness worldwide.
The international standards for finance is to ensure a similar set of transaction system, which is to be followed by firms, individuals and companies all around the world, giving a result that is comparable globally on financial statements. The globalization of multi-national financial markets increases the gap for global comparable regulations and standards of accounting. The basic difference between the International IFRS and GAAP (Generally accepted accounting practices) is that is on ‘control’ definition that affects transactions qualifying as combinations of business and are subject to be consolidated. IFRS has focused on control power; which is the power for governing operation and financial policies of a body in order to get accrue benefits from its activities.
Conclusion
With the end convergence towards implementation of IFRS on 2015, the standardization of financial statements and reporting will have improved. The target should be made sure its arrived to keep the goals of IFRS realistic.
Introduction to accounting
For proper functioning and operation of accounting professionals, some principles has been set aside to help them in their work of accounting. This paper defines accounting and goes future, giving brief information on users of financial statements/accounting.
Accounting can be defined as an act of collection, analyzing and posting, making summaries of financial transactions in a more organized manner, providing relevant information for decision makers. It also entails interpretation of relevance of relationships displayed in financial statements. Financial statements refer to the reports on finance, produced in the process of accounting and include income statement, cash flow statement balance sheet and equity statement. Accounting in a further extent ensures that financial transaction reporting has been done properly. This is standardized by the generally accepted accounting principles. (GAAPs).
The information obtained in financial accounting is relevant and is used by different stakeholders of the accounting firm. There are two categories of users of this information, namely; internal and external users. External users include those stakeholders who are not within the operating business coverage. Examples of external users are; government, creditors, labour unions, government and public. Creditors are outside stakeholders who give credit or loans to the operational business and include; suppliers, banks and financial institutions.
Internal users include stakeholders within the business and play a role in operating it. They include; management, employees, board of directors and external board of directors. Different stakeholders use the information differently depending on the area of jurisdiction and purpose.
Conclusion
Keeping of accounting records is essential as it can be used by any specific stakeholder at time of need. Records of financial accounting should be kept for the healthy of any business activity.
References
Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso: (2010) Financial Accounting: IFRS Edition: John Wiley and Sons, United States
Kimberly Charron, CMA, and Tommy Moores (2011): The Road to Convergence: business combinations under IFRS and GAAP 2011 Institute of management accountants, United States
Donatila A. (2007): Fundamentals of Accounting: Basic Accounting Principles Simplified for Accounting Students: AuthorHouse, USA
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