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IFRS and Accounting - Essay Example
Finance & Accounting
Pages 9 (2259 words)
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 it’ll take a look at some of the issues with the currently unregulated nature of management accounting. …
This essay approves that management accounting is faced with numerous challenges in its presently uncontrolled structure unlike financial accounting which is administered under the IFRS and other local GAAPs. One notable challenge to management accounting is the subjective approach with which it is inevitably implemented. Management accounting usually involves a cost-benefit analysis whereby the aim is to have the perceived benefits exceed the implementation costs. In addition, although financial measures are typically used to inform management accounting decisions, other measures can as well be used e.g. time where money cannot be used to present events. for instance time can be used to express service quality for Amazon.com which values fast delivery of items to buyers, in airlines where timely departures and arrivals represent successful operations.
This paper makes a conclusion that the introduction of IFRS regulations by the EU parliament paved way for the internalization of financial accounting. IFRS has since gained momentum and characterizes the financial accounting systems of most countries. Also plans are underway for the U.S. to drop its currently used U.S. GAAP for the IFRS by the year 2014. The report has seen how financial accounting differs with management accounting and explored the extent to which international harmonization of accounting regulations in line with IFRs has been achieved. It has also discussed some of the drawbacks inherent in the hitherto unregulated management accounting. ...
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