We are increasingly living in a global economy with trade and investment. It 's no wonder capital markets have long advocated for globally recognized accounting standards. Until recently, that common accounting language has been a missing link. Now, policymakers, lawmakers and regulators are working alongside standard-setters to provide a single set of high-quality, global accounting principles.
Changes in accounting principles are simply a change in rule, from one method of reporting for an item to another, under domestic standards such as international standards such as IFRS. The reason accountants change principles is to better present financial information and to make things more clear to users. Typically the change is required to avoid improper disclosure and it only applies to past information. Change in accounting principle does not have a prospective application. All prior comparative statements need to be revised to take the change into account in order to better reflect the current position of a business.
Even while standards setters are working to converge standards in critical areas including accounting for leases, revenue recognition, and financial instruments, companies make strategic decisions that require significant accounting change as well.
Recent financial changes have been occurred in standards for the following issues: * Financial Instruments * Consolidated Financial Statements * Employee Benefits * Separate Financial Statements * Investments in Associates and Joint Ventures
IAS 39 / IFRS 9 - Financial Instruments
IFRS 9 - Financial Instruments sets out the recognition and measurement requirements for financial instruments and some contracts to buy or sell non-financial items. The IASB is adding to the standard as it completes the various phases of its comprehensive project on financial instruments, and so it will
References: * Investopedia * Ernest & young (Financial Accounting Advisory Service) * IASPlus (deloitte) Number of words: 1520