INTERNATIONAL ACCOUNTING

Links between Financial Reporting and Capital Markets

Module 26331

Word count: 2330

Introduction:

Accounting and finance are two faces of globalization. We find the fruits of globalization in the products we buy every day but is also seen more particularly in the standards that govern certain services. Increased the number of trade or otherwise, resulting from globalization, have created links between nations and these links are sometimes the last resort to peace. All these treatments to reduce the barriers between states are the bedrock of poses first international regulations. The "northern countries" which have virtues more liberal push continually order to facilitate international trade. This race to globalization has led to incessant financial exchanges. The opening of borders allows investors to explore overseas and a global capital market is now open. Thus, the development and the densification of a capital market highlighted a problem. How to regulate trades in order to be the fairest and impartial? Each nation has its own mode of proceeding in the business world. These differences are found even in the accounting. If a company wishes to prosper mainly on the domestic market, the question of understanding of financial reporting arises less. However, as businesses begin to have referred to international and misunderstanding can take place to comply with the rules of another country and then another financial system.

According to Frederick D.S Choi Gary K.Meek (2008) one of the four pillar of a successful reporting system is the harmonization and the convergence of different accounting systems become now relevant to make financial reports understandable to all participants and therefore ensure the sustainability of the capital markets and their efficiently.

The 1989’s International Accounting Standards Committee (IASC) published the “Framework for the preparation and presentation of Financial Statements”, a first