Financial Accounting

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Question 1:
Although the adoption of a single set of globally accepted accounting standard has become a need to the globalised capital markets nowadays, however the international differences in financial reporting practices between countries still exists mainly due to the setting of national accounting standards in different countries by their own respective government. Looking at this issue in a world-wide view, we can notice that every country in the world regardless of whether it is a developed or developing country, the standard setting is always the responsibility of the government authority of that country. Taking NZ as an example, the external financial reporting framework in NZ is mainly regulated by the legislations passed by the Parliament, which are the Financial Reporting Act 1993 and Companies Act 1993 that outlines the obligation to prepare annual financial reports as required. In Australia, the Australian Accounting Standards Board (AASB), which is an Australian Government agency, is responsible for developing and maintaining the financial reporting standards applicable to both private and public entities in Australia. The functions and powers of the AASB are set out in the Australian Securities and Investments Commission Act 2001 (Kothari & Barone, 2011). Besides that, many other countries have depended on their own standard-setting organisations as well. For example, Canada has the Accounting Standards Board, Japan has the Accounting Standards Board of Japan and Germany has the German Accounting Standards Committee (Kieso, Weygandt & Warfield, 2011). Furthermore, the type of legal system adopted by different countries may also influence the financial reporting practices in those countries. There are major differences in the extent to which information is disclosed in common law countries as compared to code law countries (Chand, Patel & Day, 2008). For example, in countries such as France and Germany with a tradition of codified...
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