Recent developments in financial reporting of one country Essay

Recent developments in financial reporting of one country - Essay ExampleInvestors and analyst both rely on information and the more than they can understand the information being provided to them by an organization the lower they would consider the risk is. Therefore national news report bodies are continuously ever-changing their accounting standards to make them more global. This global approach increases the reliability, understanding and comparability for analyst and stockholders.The recent financial crisis has also encouraged the national accounting bodies to weigh a more stern approach to reporting standards. The general risk averse environment can lead to more sterner reporting requirements by accounting bodies in order to safeguard interests of characterrs of this financial information. One significant movement in this regard is the movement towards fair take account accounting methods. The aim is to use a more realistic approach towards reporting balance sheet items. T he focus is being shifted from reporting diachronic prices of balance sheet items to reporting the pass judgment future benefits received from the item (e.g. PV of expected future cash flows). This would enable users of financial information to better assess the value of company assets and thus value the entity more accurately. However this would also lead to increased volatility in value of assets. This is because the fair value of an asset is more volatile as compared to historical cost. A potential impact of these rules would be companies looking to invest in less volatile assets to reduce the risk with their holdings.The recent economic turmoil in international markets, along with factors mentioned aboveencouraged Canada financial institutions to bring major changes to its reporting standards. Canada has used GAAP (Generally Accepted Accounting Principles) for many decades. The Canadian GAAP however would today be abolished in order to shift to the IFRS (International Financi al Reporting Standards). Private, Public and non-profit entities all are affected by this major shift