Advantages And Disadvantages Of Global Accounting Standards

a)
Introduction:
This part of analysis is aimed to illustrate several merits and shortcomings of global accounting standards and discusses whether it should be undertaken or not.

Arguments for:
On the one hand, the global standards may bring about some merits. For some transnational companies, using this kind of standard may contribute to the decrease of cost, like the cost of producing reports and collecting information, handling the misunderstanding and auditing accounts. Furthermore, by applying the global accounting standards, the relevant staffs, auditors would be clearer about the accounting regulations instead of being puzzled to make comparisons with the other companies. Moreover, the global accounting standards can also bring about

For some investors, it will result in some direct merits, for instances, there will be no need for them to spend an extra fee on learning different kinds of accounting regulations any more. Except this, the risk of taking poor decision caused by misunderstanding different accounting standards will also be reduced. What’s more, Miles and Nobes (1998) stated that the global accounting standards can reduce the risk of missing investment opportunities through avoiding unfamiliar national accounting. That means global accounting standards can promote the cooperation between companies to contribute more financial transactions. Obviously, the appearance of direct merits sometimes comes along with the indirect merits. It is clear that this accounting standard can cut down the cost of adjusting and removing some barriers to international transactions. By the way, engaging more share investment may cut down the capital cost of a company can also be viewed as one of the indirect advantages. And, it seems that there will be no need for governments to regular and monitor domestic accounting regulations by using global standards any more. Moreover, the global standards can also improve the governments’ efficiency instead of making a wasteful duplication

What is more, the segment report can be viewed as a better reference for stockbrokers to judge whether the share of this company can be invested or not. For employees, it appears that they can have access to know the specific operating process of their company, which can improve the transparency and enterprise cohesion. Except these, it will be more convenient for governments to supervise and administrate the relevant companies, because the segment report can better reflect the risk level of a company. For managers, they can periodically evaluate the operating results to determine resource distributions via reading segment report. However, sometimes, geographical information imposes some restrictions, because different areas have different customers, government policy, and regional cultural differences. What is more, obviously, it could be difficult to compare each company’s segment, because not all companies can provide same segment items at the same time. From my own point, segmental reporting can offer usefulness to a large extent whatever in the angles of investors, companies and governments. But it may also bring about some restrictions due to different segments and geographical