International Accounting Standards, Regulations and Financial Reporting

Accounting standards, which determine the accounting numbers published by companies, play a major role in the wealth distribution process in market economies. Accounting standards are believed to intend to enhance the quality of accounting information and to reduce the information asymmetry among market participants. In these market economies accounting standards are set either by private standard-setting bodies or by public standard-setting bodies. The examination of private sector standard-setting processes has been the subject of a considerable number of studies. In almost all studies, private standard setting is always considered as a political activity, in which interested parties are given the opportunity to lobby the standard setter and thus influence the process. Parties affected by the rules will seek to persuade the standard setter to write the rules to their advantage. As a result, lobbying activities take place in order to promote, influence, or obstruct proposed accounting standards. The role of the standard setter is to resolve conflicts amongst interested groups by building consensus. Private standard setters develop their standards according to a due process, which allows all interested parties the opportunity to provide input on proposed accounting standards.

Book: International Accounting Standards, Regulations and Financial Reporting (Download)