Through history and the many years of accounting practice, a lot of accounting theories have been developed. Interestingly, many of those theories are grounded on the basis of prescribing and proposing how accounting processes should be performed. These are known as normative theories of accounting as they are not built on observation, but rather upon the theoristâ€™s deductive judgement, and subjective opinion (Goble 2009).
Accounting conceptual frameworks are good examples of normative theories as they provide guidelines of what accounting steps should be taken and suggest what ought to be done in relation to accounting principles and practice. The International Financial Reporting Standards (IFRS) are principles-based and is a conceptual framework that establishes broad rules, outlines standards, and dictates specific treatments (IFRS 2011). It is adopted by the International Accounting Standards Board (IASB).
This paper aims to provide an in-depth understanding of the accounting conceptual framework and the reasons for its existence. This paper will also explore accounting methods and standards that are adopted differently across the globe by focusing on the arguments for and against different countries using different accounting methods. Lastly, this paper will also provide a brief history and overview of the Canadian accounting conceptual framework for further understanding. INTERNATIONAL ACCOUNTING DIFFERENCES
Globalisation and its effect on accounting information needs
In light of the trend for globalisation as well as intensive growth in size, reach, and number of foreign direct investments, multinational companies, foreign securities listings on the stock exchanges, as well as cross-border sales and purchases of securities, the necessity for more comparable, reliable, and transparent financial reporting standards has become fundamental and paramount in the global context (Diaconu 2007). However, as stressed by Posner (2008), due
References: Deegan, C, 2009, Financial Accounting Theory, 3nd ed, McGraw - Hill Australia Pty Ltd, Sydney. Diaconu, P 2007, â€˜Impact of Globalisation on International Accounting Harmonisationâ€™, Academy of Economics Study, vol