The benefits of global accounting standards
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Learning about the specific benefits of a single set of global accounting standards can help small businesses understand how they could affect the financial reporting and evaluation of potential investments. Let us see together what some of these benefits are.

 

Comparability

The biggest benefit of a single set of global accounting standards is the enhancement in comparability between companies in different countries. Accounting standards in one country can be very different from the accounting standards in another country.

 

Before an investor can compare two potential investments, they must reconcile the two companies to the same basis of accounting. The problem is similar for creditors in the way that two companies that are in similar economic shape can appear very different

 

Enacting a set of global accounting standards would put comparisons to equal footing, making it easier for small-business owners to evaluate international options for investment and cash management. 

 

International expansion 

Moving to a single set of global financial standards would also ease barriers to expansion for companies. If companies wish to expand overseas today, they need to consider international costs of compliance, which would mean adopting a completely new set of accounting records to meet statutory requirements in the new country.

 

Central authoritative body

From a policy-making standpoint, moving to a single set of global standards puts rule making into the hands of one body. Accounting standards are set within each country by each standard-setting body. One set of standards would reduce disagreement between countries and international regulators. 

 

In some countries, businesses are required to pay reporting fees that fund these standard-setting bodies which can have a big impact on a small business. Moving to a central authoritative body could reduce these costs drastically. 

 

Thanks for taking the time to read our blog post on the benefits of global accounting standards. If you are thinking about studying in Germany, PFH offers a Master’s Degree in General Management in which you can take the cross-cutting topic of corporate management with different variants, including accounting. While if you are interested in being even more international, we also offer dual degree programmes, where you study part of your time in London, Bordeaux or even Australia and receive two degrees.

 

 

At PFH we make sure you receive a high-quality education while making the most out of your study abroad experience!