One of the main objectives of the accounting standards is to provide for the business with a consistent manner of recording and reporting its business activities and financial transactions. However due to the fact that different businesses in the different regions of the world adhere to different accounting principles the consistency of the financial reporting is disturbed and as a result it is impossible to compare the performance of different companies.
The aspect of global business management also comes into place here where the business are international and global in nature and have operations in multiple countries as a result their financial statement and records are made up according to the local, regional and regional accounting standards. This creates a discrepancy in the records for the company when its is comparing the operations in its various locations. “As globalization works its way through local economies via deregulation and modern market reforms, there is a need for the convergence of local financial reporting standards with International Accounting Standard (IAS). But, in order to achieve greater transparency worldwide as part of a wider Global Accountability Framework (GAF) the fundamental institutions of a modern market economy must be put in place before the convergence becomes effective. A more effective corporate governance code and greater independence at listed Board of Directors’ level is also needed” (Jen Shek Voon)