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In this age of globalisation, while it is absolutely necessary for large listed companies in different countries to prepare fina
Finance & Accounting
Pages 8 (2008 words)
There are two forms of accounting typically taking place within an organisation, namely, financial accounting and management accounting. Financial accounting (FA) is mainly focused on provision of financial statements of interest to external stakeholders (e.g…
Since then, financial accounting became subject to the IFRS but management accounting is still done with a great degree of flexibility and varies from one organisation to the other. This paper will then explore the degree to which the IFRS has been effective in harmonizing global financial accounting, and explore some of the drawbacks to this harmonization. Finally we’ll take a look at some of the issues with the currently unregulated nature of management accounting. IFRS and Accounting As Soderstrom and Jialin (2007) reports, the European Union (EU) parliament passed a regulation in the year 2002 that required all the companies listed in the EU to adopt a set of Generally Accepted Accounting Standards (GAAP) in their consolidated as well as simple accounts. These standards, referred to as International Financial Reporting standards (IFRS), were implemented beginning January 1st in 2005 and were targeted at financial accounting. Management accounting (sometimes referred to as managerial accounting) didn’t have to conform to any external standards since organizations are allowed independence in their management accounting structures. ...
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