The Benefits Of Uniform Standards And Effectiveness Of Uniform Standards

Introduction:
To agree with ‘the notion that uniform standards alone will produce uniform financial reporting seems naïve’, first of all, uniform standard IFRS is described which is being widely used across the globe. After that, I discussed about what we really mean by uniformity, benefits of uniform standards and effectiveness of regulators. Lastly, reasons of not having uniform reporting despite of having uniform standards are explained.
IASB and IFRS:
International Accounting Standard Committee (IASC) was formed to have a common accounting language all over the world, formed by groups of accounting professionals. It enjoyed growth and success between 1973 and 2000, after that, it was replaced by International Accounting Standard Board (IASB).

International differences in reporting result from policy choices of companies. IFRS is having many versions, it is possible that at a time everyone is adopting IFRS but different versions of it, which cause non-uniform reporting. Companies might continue with their previous practices which are possible under IFRS, apparently following it. Due to various national versions of IFRS they may continue to be consistent with favourable policies which are in transition to IFRS of other countries (Kvaal and Nobes, 2010).
Benefits of Uniform Standards:
Having uniform standards can have various advantages. First, it can have economies of scale, because, they are only invented once and everyone adopts it without changing them. Second, gives protection to auditors against managers, cannot enforce them to follow their favourable rules. Third, comparability is increased across different firms from different countries (Ball, 2006).
Aim of adoption of IFRS in EU is to improve quality of reporting by increasing their transparency and comparability, to make Europe a single capital market. Adoption of IFRS for EU firms which are listed in US will increase the international comparability of their reporting to US (Brown and Tarca,

Here, IASB is a rule maker who formulated IFRS and SEC is the regulator. This maker-regulator difference can go against uniform reporting, regulation should be improved (Brown and Tarca, 2005).
Uniform Standards alone cannot have Uniform Reporting:
Direct involvement of Chinese government in the regulation of financial reporting due to changing political situations and culture of China caused it to deviate from international reporting standards. Professional weakness of accounting profession makes it politically weak. Chinese government actively act as regulator to maintain political control (Zezhong Xiao, Weetman and Sun, 2004).
Together with political and cultural forces legal systems (common law and code law) of countries also influence implementation of international standards in different contexts. Countries following common law are USA, Canada and UK and those following code law are Germany, France and Japan. Legal system would have influence on the development of accounting system i.e. practices, standards and financial disclosure, also having significant role in in the development of capital structure, capital markets and corporate ownership (Jaggi and Low.