IAS

Rationale for the use of International Accounting Standards

Aim to Achieve
Identity

of Meaning

Uniformity

of Approach

Identity of Meaning

Refers

to harmonization of meaning of
accounting terms, so that they are clear.

Uniformity of Approach

Connotes

having the same approach.

Three Major Reasons

A

set of high quality accounting and

auditing practices in a country.

Accounting

and auditing standards are

elements of effective global financial
reporting.

There

is a close link between accounting

standards and corporate finance.

Accounting Standards
and Governance
Governance
Arrangements

Development
Outcomes
Strongly influence

One component

Accounting and
Auditing
Practices

Attract Investment
Support financial market development
Reduce country risk premium
Improve prioritization outcomes
Lower risk of financial crisis

Elements of Effective Global

Financial Reporting Infrastructure
Effective,

independent, and high quality

accounting and auditing standard
setters;
High quality auditing standard;
Audit firms with effective quality controls
worldwide;
Profession wide quality assurance;
Active regulatory oversight

Accounting Standards and

Corporate Finance
Close

link between accounting and

finance.