The competition in the market has increased tremendously. At the same time efforts are being made to identify new markets for the business. In view of this the markets have crossed the international barriers. This has led to the growth of the business and opportunities for the companies across the world, at the same time it has led to a different challenge. The investment decision is made based on the performance of the company in the market. This performance is evaluated based on the financial statements that are prepared by the companies in the respective countries of their operation. In view of this it is very important that the financial statements are prepared that offer understandability, reliability, comparability and relevance for the users in different countries. These are some of the characteristics of the financial statements. This highlights the importance of consistency between firms in various countries in keeping standard accounting practices. The report has been prepared to analyse this by highlighting various aspects in following standard accounting practices.
The development of standard accounting standards has been supported by two aspects. Firstly it is the preparation of the financial statements and another is reducing the chances of failures and fraudulent practices. One of steps that have been taken is the development and adoption of International FInancal Reporting Standard (IFRS). These have been designed so that the accounts prepared by the companies are understandable and comparable at the international level. It is viewed that it will help the companies that have presence in several countries.