Accounting Philosophy.
The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts. The issues which arise include the difficulty of establishing a true and fair value of an enterprise and its assets; the moral basis of disclosure and discretion; the standards and laws required to satisfy the political needs of investors, employees and other stakeholders.
The discipline of accounting insists that transparency is achievable. Fairness has an important role in the practice of accounting. Accordingly, it seems appropriate that philosophy as a relevant way of understanding truth and fairness in accounting is well considered. Some authors have already underlined the key role played by philosophy in accounting such as social justice, ethical conscience, economic entitlement etc. Thus concepts like fairness, justice, equity, and truth have a due place in accounting.
Preamble
Often, accountants are trusted to provide the knowledge such as financial statement in which financial/managerial decisions are based. According to the IASB project, conceptual framework, it states the role of financial report as
'The primary users need information about the resources of the entity not only to assess an entity's prospects for future net cash inflows but also how effectively and efficiently management has discharged their responsibilities to use the entity's existing resources'
Such great significance is put on the role of accounting in business industry yet the issue of trust has always been the fundamental problem. Mackenzie says 'Trust in numbers, however, works only if those who produce the numbers can be trusted.'
Evaluating and understanding the fundamental ideas of accounting is extremely important as they establish the foundational structures of accounting in which most of the constructed knowledge is based on. It introduces the principles of accounting which provide the understanding of reasons behind all decisions.
Objectives of accounting.
Financial reporting aims to provide information about firms' financial performance of which the firm uses to record the past transactions and apply changes to the future financial plan.
IASB (International Accounting Standard Board)
the ultimate aims of the IASB and other accounting standard-setters are:
-to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and c omparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions;
-to promote the use and rigorous application of those standards;
in fulfilling the objectives associated with (a) and (b), to take account of, as
- appropriate, the special needs of small and medium-sized entities and emerging
- economies; and to bring about convergence of national accounting standards and IFRSs to high quality solutions.
IFRS (International Financial Reporting Standard)
The mission of IFRS is to bring transparency, accountability and efficiency to financial markets around the world. It aims to build trust in the society and also to provide long-term financial stability.
-IFRS brings transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.
-IFRS strengthens accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. Our standards provide information that is needed to hold management to account. As a source of globally comparable information, IFRS is also of vital importance to regulators around the world.
-IFRS contributes to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. For businesses, the use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs.
The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts. The issues which arise include the difficulty of establishing a true and fair value of an enterprise and its assets; the moral basis of disclosure and discretion; the standards and laws required to satisfy the political needs of investors, employees and other stakeholders.
The discipline of accounting insists that transparency is achievable. Fairness has an important role in the practice of accounting. Accordingly, it seems appropriate that philosophy as a relevant way of understanding truth and fairness in accounting is well considered. Some authors have already underlined the key role played by philosophy in accounting such as social justice, ethical conscience, economic entitlement etc. Thus concepts like fairness, justice, equity, and truth have a due place in accounting.
Preamble
Often, accountants are trusted to provide the knowledge such as financial statement in which financial/managerial decisions are based. According to the IASB project, conceptual framework, it states the role of financial report as
'The primary users need information about the resources of the entity not only to assess an entity's prospects for future net cash inflows but also how effectively and efficiently management has discharged their responsibilities to use the entity's existing resources'
Such great significance is put on the role of accounting in business industry yet the issue of trust has always been the fundamental problem. Mackenzie says 'Trust in numbers, however, works only if those who produce the numbers can be trusted.'
Evaluating and understanding the fundamental ideas of accounting is extremely important as they establish the foundational structures of accounting in which most of the constructed knowledge is based on. It introduces the principles of accounting which provide the understanding of reasons behind all decisions.
Objectives of accounting.
Financial reporting aims to provide information about firms' financial performance of which the firm uses to record the past transactions and apply changes to the future financial plan.
IASB (International Accounting Standard Board)
the ultimate aims of the IASB and other accounting standard-setters are:
-to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and c omparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions;
-to promote the use and rigorous application of those standards;
in fulfilling the objectives associated with (a) and (b), to take account of, as
- appropriate, the special needs of small and medium-sized entities and emerging
- economies; and to bring about convergence of national accounting standards and IFRSs to high quality solutions.
IFRS (International Financial Reporting Standard)
The mission of IFRS is to bring transparency, accountability and efficiency to financial markets around the world. It aims to build trust in the society and also to provide long-term financial stability.
-IFRS brings transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.
-IFRS strengthens accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. Our standards provide information that is needed to hold management to account. As a source of globally comparable information, IFRS is also of vital importance to regulators around the world.
-IFRS contributes to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. For businesses, the use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs.
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