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Accounting Reporting Criteria Paper
Accounting reporting criteria includes many factors and covers many elements. From
Fundamental Financial Accounting Concepts, "accounting is so important that it is often
called the language of business. In fact, accounting affects not only individual businesses
but also society as a whole"“ (Edmonds, Edmonds, McNair, Olds, & Schneider, 2006, p.
4). Global business requires added consideration in the way of accounting reporting
criteria. With heightened consumer protection becoming increasingly important, regulation
of American reporting criteria such as The Sarbanes-Oxley Act (SOX) is common to hear
or the Security Exchange Commission (SEC) requirement of management submitting a
financial statement in an organization report. Since so much publicity has been given to
U.S. reporting regulations even more difficultly is to identify the regulations in foreign
reporting criteria. Many countries do not have the high level of regulations that America
has. This makes it extremely important for internationally operating organizations to
understand and embrace best practices in financial reporting across borders. The
challenges for a U.S. company to deal with a foreign company are regulatory environment,
issues with foreign currency, and the differences in general accepted accounting principles.
One example of a collaborative effort to create and unify reporting standards across
borders is the International Accounting Standards Board (IASB). The IASB is a regulatory
environment and was formed in hopes of overseeing unification in the way of international
accounting standards (International Accounting Standards Board, 2008). The IASB is a
strong supporter of the International Financial Reporting Standards (IFRS) (International
Accounting Standards Board, 2008). The IFRS is a standard best practices guide for
financial reporting covering many areas in the content of financial statements and
reporting (Wikipedia, 2008). Although its guidelines cannot be enforced, over 100
countries are members to comply with its practices (Edmonds, Edmonds, McNair, Olds, &
Schneider, 2006). Some areas covered by the IFRS are statements of cash flow, accounting
acquisition, good will and consolidated financial statements (Wikipedia, 2008). The IFRS
offers a solution to the difficult task of getting all countries on the same page to reporting
regulations.
With foreign currency effecting the activities and interests of investors andlenders,
companies are becoming increasingly global, the SEC is increasing its involvement.
Forums are created to develop a globally accepted, high quality financial reporting
framework. The efforts, at both a domestic and international level, consistently have been
based on the view that the only way to achieve fair, liquid, and efficient capital markets
worldwide is by providing investors with information that is comparable, transparent, and
