A Sound Financial Reporting System, Supported by High Quality Accounting Standards and Backed by a Solid Regulatory, Governance and Ethical Framework, Is a Pre-Requisite for Economic Development.
“A sound financial reporting system, supported by high quality accounting standards and backed by a solid regulatory, governance and ethical framework, is a pre-requisite for economic development”.
Accounting has been around since the beginning of civilization and played an important role in the development of cities, trade and the concepts of wealth. Nowadays, business is very complex and therefore there is an increased need for providing accurate and reliable financial information. Moreover, according to ACCA’s beliefs, the importance of financial reporting and accounting standards is significant not only for the accountancy profession, but also for the world economy. [1] Dr Joe Sumners, Auburn University, defines economic development as “the process by which a community creates, retains, and reinvests wealth and improves the quality of life”.[2] Economic development encompasses diverse disciplines, including economics, business, political science, public administration, marketing and communications, sociology, community planning, education. In that case, it can be questioned whether good financial reporting system, supported by accounting standards, regulatory framework, good corporate governance and ethical standards, plays also an important role for further economic development.
The purpose of this report is to critically evaluate the relationship between above-mentioned terms with reference to economic development. The first part of this paper describes individual terms which are significant for accountancy field. On the other hand, the second part represents the relationship between these terms and economic development, supported by subjective discussions.
Financial reporting objectives are the key determinants of the nature of a financial reporting system. The primary objective is to provide information useful for making investment and credit decisions. To be useful, information must be relevant, reliable, and comparable, and
Accounting has been around since the beginning of civilization and played an important role in the development of cities, trade and the concepts of wealth. Nowadays, business is very complex and therefore there is an increased need for providing accurate and reliable financial information. Moreover, according to ACCA’s beliefs, the importance of financial reporting and accounting standards is significant not only for the accountancy profession, but also for the world economy. [1] Dr Joe Sumners, Auburn University, defines economic development as “the process by which a community creates, retains, and reinvests wealth and improves the quality of life”.[2] Economic development encompasses diverse disciplines, including economics, business, political science, public administration, marketing and communications, sociology, community planning, education. In that case, it can be questioned whether good financial reporting system, supported by accounting standards, regulatory framework, good corporate governance and ethical standards, plays also an important role for further economic development.
The purpose of this report is to critically evaluate the relationship between above-mentioned terms with reference to economic development. The first part of this paper describes individual terms which are significant for accountancy field. On the other hand, the second part represents the relationship between these terms and economic development, supported by subjective discussions.
Financial reporting objectives are the key determinants of the nature of a financial reporting system. The primary objective is to provide information useful for making investment and credit decisions. To be useful, information must be relevant, reliable, and comparable, and
References: Armstrong, C., Guay, W., & Weber, J. (2009). The Role of Information and Financial Reporting In Corporate Governance and Contracting, Retrieved from http://mitsloan.mit.edu/jae/pdf/Session_II_Armstrong_Guay_Weber.pdf Atrill, P., & McLaney, E Berendt, A., & Moxey, P. (2008). Corporate Governance and the Credit Crunch, Retrieved from http://www2.accaglobal.com/documents/corpgov_credit_crunch.pdf Definition of International Financial Reporting Standards International Financial Reporting Standards: Objective of IAS 1. (2011). Financial Reporting (module handbook), p. 1. Sumners, J. (2011). Economic Development Broadly Defined, Retrieved from http://ecdi.wordpress.com/2011/06/15/economic-development-broadly-defined/ Vaswani, K Welch, I. (2011). The importance of global standards, Retrieved from http://www.acca.co.uk/pubs/af/reporting/new/importance_global_standards.pdf -----------------------