Recognition of Bad Debt Expenses in Accrual Accounting
The International Accounting Standards Board (IASB) plays a pivotal role in maintaining global accounting consistency and transparency. Based in London, the IASB develops and issues International Financial Reporting Standards (IFRS), a unified, globally accepted accounting language used by companies across more than 140 jurisdictions [1][2].
Establishing and maintaining IFRS is a key responsibility of the IASB. By setting the technical agenda, issuing new accounting standards, and approving interpretations that clarify accounting practices, the IASB ensures uniform guidance worldwide [1]. This harmonisation of financial reporting practices improves the reliability and comparability of financial information on a global scale [1][2][3][4].
The IASB's work enhances comparability and transparency. By providing clear, consistent rules for financial reporting, IFRS reduces discrepancies caused by different national accounting standards, making financial statements more comparable across countries and industries [3][4]. This transparency supports investors, regulators, and other users in making informed economic decisions [2][3].
The IASB operates under the oversight of the IFRS Foundation, a not-for-profit organisation that ensures the standards meet high quality, enforceability, and public interest goals [2]. The IASB is funded by private donors and corporations. Members are appointed based on their expertise, each having voting rights in standard-setting decisions [1].
Creditors play a crucial role in determining how businesses keep their books. By requiring accurate and timely financial information, they help ensure consistency and transparency in financial reporting, allowing them to make informed decisions about lending [5]. Banks, credit unions, and accounts receivable financing companies also play a role in shaping accounting standards to support the needs of lenders, borrowers, and investors [6]. Accounts receivable financing companies require clear and detailed financial information about a company's receivables [7].
Debtors can influence accounting standards, sometimes leading to reduced transparency, increased complexity, and erosion of consistency in financial reporting [8]. However, by scrutinizing accounting practices, creditors help counteract these potential issues, ensuring that financial statements are reliable and comparable [9].
The Financial Accounting Standards Board (FASB), based in the United States, sets accounting standards for US companies [10]. The Institute of Chartered Accountants in England and Wales (ICAEW) is a professional organization that sets ethical principles and technical standards for accountants in England and Wales, and is considered a benchmark for transparent and reliable financial reporting [11]. The American Institute of Certified Public Accountants (AICPA) is a similar professional organization that influences how accountants do their work in the US [12]. Both the FASB and AICPA aim to achieve transparency, comparability, and accountability in financial reporting, similar to the IASB's objectives [13][14].
In summary, the IASB ensures global accounting consistency and transparency by creating clear, enforceable IFRS that harmonize financial reporting practices worldwide, thereby improving the reliability and comparability of financial information on a global scale [1][2][3][4]. This work is crucial for creditors, investors, and governments, as it enables informed decision-making in the global economy.
The IASB's work in the field of technology, by developing and implementing International Financial Reporting Standards (IFRS), significantly advances the business sector through the use of a unified, globally accepted accounting language [1]. This technological innovation, in turn, enhances the finance industry's transparency and comparability of financial information across numerous countries and industries [3].
