Financial statements and accounting pronouncements are used by stakeholders in organizations·shareholders, employees, creditors, investors, suppliers, customers·to evaluate a company's performance and potential. When companies were based in the same country as their stakeholders, following the accounting regulations of that country provided few problems. Standards were necessary·particularly for publicly traded companies·to ensure that comparisons could be made among different companies while the same "definitions" were in place for the "language" of business regardless of who prepared financial statements. As business has become increasingly global, however, the differences in standards among various countries has become more obvious and, in some cases, troublesome. The United States has general accepted accounting principles that apply to its publicly-traded companies; because of the size and complexity of the American market, these standards have also been implemented in other countries, as well. In Europe, however, different national standards have remained in place until 2005, when a single standard was imposed on European companies. This research considers the importance of financial statements in general, the international standards imposed by the European Union, whether Quaccess should adopt these international standards, and whether governments should be involved in the imposition of accounting standards.
SHOULD QUACCESS MOVE TOWARD INTERNATIONAL STANDARDS?
At this point, Quaccess is considering incorporating newly adopted European standards for its financial reporting. The company is based in the United States and is thus required to follow American standards in its financial reporting, but there is some question as to whether the company could benefit from reporting according to the European standards, as well. In order to understand whether Quaccess should move to the European standard, it is necessary to...