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Question

2&7
NAJIHAH BINTI MOHD RADZI
MOHAMAD IMRAN BIN AMER
NOORSYAM AMALIENA BINTI SALLEH
NURFATIMA AMIRA BINTI ZULKEPLI

Q7 Discuss what are main obstacles and or challenges to IASB in the ongoing
standardisation of financial reports.(June 2014)
accounting treatment of many items in different countries
Example: the companies in the EU are allowed to report assets on the
balance sheet at market values, whereas US companies are only allowed to
report assets like property, plant, and equipment in amounts up to the value
of the historical cost.
societal factors that influence accounting and consequently lead to diversity
between accounting systems.
These societal factors are related to the different ways in which the societies and
countries organize themselves.
Example: geographically close countries, such as the US and Mexico, may
have fundamentally different accounting principles. The reason for this is
that those countries and their accounting systems may have been exposed to
different external and internal influences, such as the culture and the
religion(s) of the country, regulatory/governmental or political, economic,
legal, tax, educational, and financial systems, as well as trade, current and
historical events and relationships to other countries, forms of investment.

legal system common law and the code (codified) law have been defined as the
two major types of legal systems.
With regard to accounting, in code law countries, the accounting rules are
given in the accounting law that is passed by the government and as a result,
the accounting profession does not have much influence on the developments
of the accounting standards.
In common law countries, the accounting rules are established by nongovernmental organizations and the accounting profession. It is claimed that
because of the difference in the source behind the establishment of accounting
rules and standards, these tend to be more detailed in common law countries
and in code law countries
Example:
Taxation.
The financial statements are used as the basis for taxation in many countries,
especially in code law countries. In common law countries, the financial
statements are adjusted when they are sent to the government for the purpose
of taxation and respectively when they are sent to the stakeholders.
Example:

providers of financing.
There are countries in which the members of general population are the
shareholders and thus the providers of financing or the owners. In these
countries, the orientation of the financial statements is towards the income
statements, so that the shareholders can have proper insight into profit of a
company.
However, there are countries where banks, powerful and influential families, as
well as the authorities and the government are the providers of financing. Since,
for instance, banks have more interest in solvency and liquidity and less in
profit, the orientation of the financial statements tends to be towards the
balance sheet
Examples: The countries using the Anglo-Saxon/American model have
also been described as those where the common law is applied, where the
public is the main provider of financing of the companies, and
where the financial statements are adjusted when they are sent to
the government for the purpose of taxation and respectively when they are
sent to the stakeholders.
The countries that belong to the continental-European group apply the
codified law, and here, the companies financial statements are the
basis for taxation and the providers of financing are banks, families,
and the state