Accounting Standards And The Financial Crisis Essay

Introduction The 2007 financial crisis renewed attention on accounting standards as stakeholders sought possible contributors to the crisis (Hellenier, 2011). Accounting standards are set regulations that limit the manner in which transactions are made and accounted for. They are meant to instill sanity into the financial system. The 2007 financial crises has been attributed to weak financial regulations which encouraged accounting malpractices like mis-presentation of the financial situation of businesses in order to keep investors interested (Hellenier, 2011). Accounting standards set requirements for the preparation and reporting of financial information. They, therefore, help minimize such incidences by facilitating the flow of accurate financial information to investors, creditors, regulators, banks, etc (Hertog, 2003). Having an internationally acceptable system of presenting this information brings sanity to the financial system in addition to increasing investor and consumer confidence in banking institutions, businesses, governments, etc. Financial standards have been quite efficient in improving the global financial transparency and stability. However, there still exist limitations in these standards, such as those manifested during the financial crisis where some financial institutions devised ways of evading regulation. In the event of such occurrences, accounting regulatory bodies are required to come up with new standards, or revise the existing ones so as toShow MoreRelatedEffects of the Global Financial Crisis on the International Accounting Standards2076 Words   |  9 PagesAbstract Since July 2007, leading economist believe that this has been the worst financial crisis since the great depression. This essay outlines various viewpoints and influences in respect to the paradigm. 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