Unified Financial Accounting Standards Essay Example | Topics and Well Written Essays - 1250 words

Unified Financial Accounting Standards - Essay Example Unified Financial Accounting Standards Indeed, since the modern business takes place in a global market, there is absolute need to define how to do business across all nations (Ingram, & Albright, 2007). As such, various organizations seek to establish different business and financial measures to define the universal manner of doing global business. Financial accounting standards are some of the measures, which all companies must comply with while doing business, assessing their progress, and reporting their success. Financial accounting standards seek to establish fairness, equality, uniformity, accuracy, and transparency in the preparation and presentation of financial statements. As such, financial accounting standards must be clearly understandable and comparable so that the users can apply them effectively. The accounting profession adopted the generally accepted accounting principles, which defines universal reporting principle in the global market (Ingram, & Albright, 2007). Financial accounting standards derive ma ny merits in the business field and various users rely on financial accounting standards to perfume their business and accounting responsibilities. The users may include investors, companies, and auditors. This paper defines the characteristics of the unified financial accounting standards and discusses the benefits of unified financial accounting standards to investors, companies, and auditors with reference to preparing, reporting, and comparing the financial performance in the modern global market. The unified financial accounting standards have certain characteristics, which guarantee accurate and material communication of the business firm’s financial position and performance. ... These characteristics include reliability, transparency, relevance, consistency, comparability, understandability, uniformity, and fairness. The unified financial accounting standards derive significant benefits to the investors. Most assuredly, the unified financial accounting standards make it easy for investors to compare between companies since they can establish the true financial position of the reference companies. This is usually important especially when the investor is a foreign company since the financial standards apply universally globally. It is quite clear that unified financial accounting standards provide a means of communication between a company and the investors in the company. Through unified financial accounting standards, the investors can deduce the effectiveness of the company and its management in comparison to other companies in the same industry (Financial Accounting Standards Board, 2013). In addition, the unified financial accounting standards avail rele vant financial information that helps the investors to make concrete decisions in reference to the company. Indeed, the investors use this financial information to assess the effectiveness in implementing the company resources by the management. Actually, it is from the information that the investors decide whether to invest in the company since the financial information can manifest the profitability, the competitive position, the going concern, and viability of the company in the stock market. More so, the unified financial accounting standards define the accrued returns of the company to the investors. At the same time, the financial standards evaluate the cost of making accounting changes and derive the benefit of