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Accounting standard
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<h2 id="benefits">Benefits</h2> <p>The lack of transparent accounting standards in some nations has been cited as increasing the difficulty of doing business in them. In particular, the Asian financial meltdown in the late 1990s has been partially attributed to the lack of detailed accounting standards. Giant firms in some Asian countries were able to take advantage of their poorly devised accounting standards to cover up immense debts and losses, which yielded a collective effect that eventually led the whole region into financial crisis. </p> <h2 id="limitations">Limitations</h2> <p>The notable limitations of accounting standards are their inflexibility, time-consuming process to create them, the difficulty of choosing between alternative treatments and their restrictive scope.<a class="footnote-ref" id="fnref:4" href="#fn:4"><sup>4</sup></a> Accounting standards were largely written in the early 21st century. <a href="/facts/Accounting_scandals/uuNk65lG">Accounting scandals</a> such as <a href="/facts/Worldcom/sxFMcxef">Worldcom</a> and <a href="/facts/Enron/NxH90ght">Enron</a> illustrate that, despite all these efforts, widespread fraud can still occur, and even be missed by the outside auditors. </p> <h2 id="accounting-standards-by-nation">Accounting standards by nation</h2> <ul><li><a href="/facts/Canada/cWWFM8oc">Canada</a> – <a href="/facts/Generally_Accepted_Accounting_Principles_(Canada)/FNLngRvY">Generally Accepted Accounting Principles ( Canada)</a></li> <li><a href="/facts/China/lTjIXY5p">China</a> – <a href="/facts/Chinese_Accounting_Standards/a0FH45Xs">Chinese Accounting Standards</a> (<i>Zhōngguó qǐyè kuàijì zhǔnzé</i> 中国企业会计准则)</li> <li><a href="/facts/France/CxIeIKM3">France</a> – <a href="/facts/French_generally_accepted_accounting_principles/6Ftdr3gv">Generally Accepted Accounting Practice (<i>Plan Comptable Général</i>)</a></li> <li><a href="/facts/Germany/paluuWBX">Germany</a> – Generally Accepted Accounting Practice (Grundsätze ordnungsmäßiger Buchführung)</li> <li><a href="/facts/India/1kKHcnxM">India</a> – <a href="/facts/Indian_Accounting_Standards/eNF1cLul">Indian Accounting Standards (Ind_AS)</a><a class="footnote-ref" id="fnref:5" href="#fn:5"><sup>5</sup></a> can be used by Any Company within the rules and regulations under <a href="/facts/Companies_Act_2013/PVfo8RQo">Companies Act,2013</a> And <a href="/facts/Generally_Accepted_Accounting_Principles_(United_States)/p4dT71aU">Generally Accepted Accounting Principles (USA)</a> is used by Foreign and Multinational company in India</li> <li><a href="/facts/Italy/tUf0PDYF">Italy</a> – Principi contabili nazionali</li> <li><a href="/facts/Accountancy_in_Luxembourg/qBa4bIAp">Luxembourg - Luxembourg Generally Accepted Accounting Principles (Lux GAAP)</a></li> <li><a href="/facts/Nepal/yWCzTBR2">Nepal</a> – <a href="/facts/Nepal_Financial_Reporting_Standards/Pwc4IYoo">Nepal Financial Reporting Standards</a></li> <li><a href="/facts/Russia/jfkCwyxn">Russia</a> – <a href="/facts/Russian_GAAP/fWmzA5Xl">Russian GAAP</a></li> <li><a href="/facts/Sweden/u3qC7lyj">Sweden</a> – <a href="/facts/BAS_(accounting)/F83xWB3r">BAS (accounting)</a></li> <li><a href="/facts/Switzerland/LcGuxeTe">Switzerland</a> – <a href="https://www.fer.ch/en/standards/">Swiss GAAP FER (<i>Fachempfehlungen zur Rechnungslegung</i>)</a></li> <li><a href="/facts/Turkey/KIYAWAs0">Turkey</a> – Uniform Accounting Plan (Turkey)</li> <li><a href="/facts/United_Kingdom/kuPAILt2">United Kingdom</a> – <a href="/facts/Generally_Accepted_Accounting_Practice_(UK)/29J7capL">Generally Accepted Accounting Practice (UK)</a></li> <li><a href="/facts/United_States/P0sCdLe5">United States</a> – <a href="/facts/Generally_Accepted_Accounting_Principles_(United_States)/p4dT71aU">Generally Accepted Accounting Principles (United States)</a> Domestic firms typically report in this format. Foreign firms that trade in the U.S. typically report in IFRS format (below). <a href="/facts/Statutory_accounting_principles/mh8nMjpw">Statutory accounting principles</a> are for insurance companies in the US.</li></ul> <h2 id="global-standardization-and-ifrs">Global standardization and IFRS</h2> <p>Many countries use or are converging on the <a href="/facts/International_Financial_Reporting_Standards/mpAxkfpd">International Financial Reporting Standards</a> (IFRS) that were established and are maintained by the <a href="/facts/International_Accounting_Standards_Board/l2J9px80">International Accounting Standards Board</a>. In some countries, local accounting principles are applied for regular companies but listed or large companies must conform to IFRS, so statutory reporting is comparable internationally. </p><p>All listed and grouped EU companies have been required to use IFRS since 2005, Canada moved in 2009,<a class="footnote-ref" id="fnref:6" href="#fn:6"><sup>6</sup></a> Taiwan in 2013,<a class="footnote-ref" id="fnref:7" href="#fn:7"><sup>7</sup></a> and other countries are adopting local versions.<a class="footnote-ref" id="fnref:8" href="#fn:8"><sup>8</sup></a><a class="footnote-ref" id="fnref:9" href="#fn:9"><sup>9</sup></a> </p><p>In the <a href="/facts/United_States/P0sCdLe5">United States</a>, while "... the SEC published a statement of continued support for a single set of high-quality, globally accepted accounting standards, and acknowledged that IFRS is best positioned to serve this role..."<a class="footnote-ref" id="fnref:10" href="#fn:10"><sup>10</sup></a> progress is less evident.<a class="footnote-ref" id="fnref:11" href="#fn:11"><sup>11</sup></a><a class="footnote-ref" id="fnref:12" href="#fn:12"><sup>12</sup></a> </p> <h2 id="see-also">See also</h2> <ul><li><a href="/facts/Constant_item_purchasing_power_accounting/L7lCEkyI">Constant item purchasing power accounting</a></li> <li><a href="/facts/Convention_of_consistency/DdQTqAGQ">Convention of consistency</a></li> <li><a href="/facts/Convergence_of_accounting_standards/xAP9ww3c">Convergence of accounting standards</a></li> <li><a href="/facts/Creative_accounting/cae2g0Wy">Creative accounting</a></li> <li><a href="/facts/Forensic_accounting/9Ke537wk">Forensic accounting</a></li> <li><a href="/facts/Philosophy_of_accounting/10HTmF7N">Philosophy of accounting</a></li></ul> <h2 id="further-reading">Further reading</h2> <ul><li><a href="/facts/Meeks,_Geoff/0XW0Ta2x">Meeks, Geoff</a>, and GM Peter Swann. "Accounting standards and the economics of standards." <i>Accounting and Business Research</i> 39.3 (2009): 191-210m</li></ul> <h2 id="external-links">External links</h2> <ul><li> Media related to Accounting standard at Wikimedia Commons</li> <li><a href="http://www.fasab.gov/document-by-chapter/">FASAB Handbook of Federal Accounting Standards (2014)</a></li></ul> <h2 id="references">References</h2> <ol> <li id="fn:1"><p>"Accounting and Auditing in the 1930s - The Status of GAAP". The Richard C. Adkerson Gallery on the SEC Role in Accounting Standards Setting. <a href="https://www.sechistorical.org/museum/galleries/rca/rca02b-status-gaap.php" target="_blank">https://www.sechistorical.org/museum/galleries/rca/rca02b-status-gaap.php</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li> <li id="fn:2"><p>WiseGeek. "What are the Generally Accepted Accounting Principles?". WiseGeek. Retrieved 9 February 2017. <a href="http://www.wisegeek.org/what-are-the-generally-accepted-accounting-principles.htm#" target="_blank">http://www.wisegeek.org/what-are-the-generally-accepted-accounting-principles.htm#</a> <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li> <li id="fn:3"><p>International Federation of Accountants (16 June 2021). "Global Public Sector Shift to Accrual Accounting Forecast to Continue". <a href="https://www.ifac.org/news-events/2021-06/global-public-sector-shift-accrual-accounting-forecast-continue" target="_blank">https://www.ifac.org/news-events/2021-06/global-public-sector-shift-accrual-accounting-forecast-continue</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li> <li id="fn:4"><p>"The Limitations Of Accounting Standards – Financial Yard". <a href="https://financialyard.com/the-limitations-of-accounting-standards/#:~:text=The%20notable%20limitations%20of%20accounting,treatments%20and%20their%20restricted%20scope." target="_blank">https://financialyard.com/the-limitations-of-accounting-standards/#:~:text=The%20notable%20limitations%20of%20accounting,treatments%20and%20their%20restricted%20scope.</a> <a href="#fnref:4" class="footnote-back-ref">↩</a></p></li> <li id="fn:5"><p>"Accounting Standards". <a href="https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/accounting-standards.html#:~:text=The%20Indian%20Accounting%20Standards%20(Ind,held%20by%20the%20IFRS%20Foundation" target="_blank">https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/accounting-standards.html#:~:text=The%20Indian%20Accounting%20Standards%20(Ind,held%20by%20the%20IFRS%20Foundation</a> <a href="#fnref:5" class="footnote-back-ref">↩</a></p></li> <li id="fn:6"><p>"AcSB Confirms Changeover Date to IFRSs". Canadian Institute of Chartered Accountants. 13 February 2008. Archived from the original on 7 September 2009. Retrieved 8 August 2009. <a href="https://web.archive.org/web/20090907132445/http://www.cica.ca/ifrs/media-room/media-releases/2008/pf_item2992.aspx" target="_blank">https://web.archive.org/web/20090907132445/http://www.cica.ca/ifrs/media-room/media-releases/2008/pf_item2992.aspx</a> <a href="#fnref:6" class="footnote-back-ref">↩</a></p></li> <li id="fn:7"><p>Chen, Ted (January 1, 2013). "IFRS accounting measures to take effect for all listed companies in Taiwan in 2013". The China Post. Archived from the original on 2017-04-05. <a href="https://web.archive.org/web/20170405205337/http://www.chinapost.com.tw/taiwan/national/national-news/2013/01/01/365947/IFRS-accounting.htm" target="_blank">https://web.archive.org/web/20170405205337/http://www.chinapost.com.tw/taiwan/national/national-news/2013/01/01/365947/IFRS-accounting.htm</a> <a href="#fnref:7" class="footnote-back-ref">↩</a></p></li> <li id="fn:8"><p>"New Zealand International Financial Reporting Standards 2007-2014". The Treasury New Zealand. <a href="https://www.treasury.govt.nz/information-and-services/state-sector-leadership/guidance/financial-reporting-policies-and-guidance/accounting-standards/new-zealand-international-financial-reporting-standards-2007-2014" target="_blank">https://www.treasury.govt.nz/information-and-services/state-sector-leadership/guidance/financial-reporting-policies-and-guidance/accounting-standards/new-zealand-international-financial-reporting-standards-2007-2014</a> <a href="#fnref:8" class="footnote-back-ref">↩</a></p></li> <li id="fn:9"><p>"Financial reporting framework in Australia", Deloitte, IAS Plus. <a href="http://www.iasplus.com/en/jurisdictions/oceania/country1" target="_blank">http://www.iasplus.com/en/jurisdictions/oceania/country1</a> <a href="#fnref:9" class="footnote-back-ref">↩</a></p></li> <li id="fn:10"><p>"IFRS: Current situation and next steps", pwc.com <a href="http://www.pwc.com/us/en/issues/ifrs-reporting/transition-to-ifrs-status.jhtml" target="_blank">http://www.pwc.com/us/en/issues/ifrs-reporting/transition-to-ifrs-status.jhtml</a> <a href="#fnref:10" class="footnote-back-ref">↩</a></p></li> <li id="fn:11"><p>"IFRS: Current situation and next steps", pwc.com <a href="http://www.pwc.com/us/en/issues/ifrs-reporting/transition-to-ifrs-status.jhtml" target="_blank">http://www.pwc.com/us/en/issues/ifrs-reporting/transition-to-ifrs-status.jhtml</a> <a href="#fnref:11" class="footnote-back-ref">↩</a></p></li> <li id="fn:12"><p>"New mechanisms eyed by FASB, IASB in long march toward global comparability", Ken Tysiac January 10, 2013, journalofaccountancy.com <a href="http://www.journalofaccountancy.com/News/20137119.htm" target="_blank">http://www.journalofaccountancy.com/News/20137119.htm</a> <a href="#fnref:12" class="footnote-back-ref">↩</a></p></li> </ol>