The International Accounting Standards Committee (IASC) dates back its formation to 1973. It was however restructured in 2001 when the name was changed to ?The International Accounting Standards Board (IASB)'. The IASB is an independent private sector body. The prime objective of the IASB is to promote convergence and concentration of accounting principles that are applied widely by businesses and other organizations for financial reporting across the world. Some of the other key advantages are listed below.
? Comparing companies at the financial level will require the harmony and unison of the accounts of various companies'. This makes comparison a less burdensome task. The role of the IASB in this situation is to satisfy the informational needs of international corporations.
? The IASB focuses on the creation and displaying of companies' consolidated accounts and the corresponding financial statements. The IASB ensures that authenticity is maintained while disclosing the relevant information to investors and shareholders.
If the motives of the IASB are as mentioned above, the Swedish GAAP is designed to suit the needs of a different sector of audience. The audience panel comprises of not only international investors and large companies but also for smaller firms and a large variety of stakeholders.
[...] List of references Text Books Corporate Financial Reporting A Global Percepective, Hervé Stolowy & Michel J. Lebas, Thomson Learning, p18. [...]
[...] The Swedish report is more simple and only one page long. The auditors of H&M state that the financial statements give a true and fair view of the group's financial position and that the proposal for profit distribution is recommended. Inditex's auditors give a positive stand too and also state that the company has done the financial statements, according to the IFRS, correctly. Risk management Fashion risk Inditex and H&M are clothing companies that aim to offer their customers chic clothing at relatively low prices. [...]
[...] The IAS exists to satisfy the informational needs of international corporations 2. Because of this, the focus is on the companies' consolidated accounts and the financial statements should provide the necessary information for investors and shareholders. On the other hand, the Swedish GAAP is designed for another audience, not only for international investors and large companies but also for smaller firms and a large variety of stakeholders. In this paper we will compare the companies H&M and Inditex which are both working in the field of textile manufacturing/retailing and have about the same revenues in their financial statements for 2005. [...]
[...] Also, both accounting standards require comparative information of the last business period so that additional periods can be presented. According to the IAS and the Swedish GAAP, consolidated financial statements must be presented unless specific criteria are met Furthermore, IFRS has minimum requirement for disclosures in financial statements. Unlike IFRS in the Swedish GAAP, there is a certain format defined for the balance sheet and the income statement. It is also part of the Swedish regulations to present the financial statement of the parent organization in addition to the consolidated financial statement. [...]
[...] Though brand building might be costly in the beginning, the diversity coming with it could be significantly helpful. Financial risk Currency risk Both Inditex and H&M are multi-national companies. The latter uses Swedish Kronor for its accounts while its Spanish rival uses Euros. But since Inditex has 3000 outlets in 64 countries in 7 http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1050&language=english four continents and H&M operates in 24 countries, they are exposed to currency risks due to the fact that any fluctuation in the US Dollar, the Mexican Peso, the Japanese Yen and the Pound Sterling rate will have an instant effect on their future commercial transactions and assets and liabilities recorded in currencies other than the company's operating currency, and the value of their financial instruments may vary due to the changes in exchange rates. [...]
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