Publicly traded companies typically are subject to rigorous standards.

Small and midsized

businesses often follow more simplified standards, plus any specific disclosures required by their
specific lenders and shareholders. Some firms operate on the cash method of accounting which
can often be simple and straight forward. Larger firms most often operate on an accrual basis.
Accrual basis is one of the fundamental accounting assumptions and if it is followed by the
company while preparing the Financial statements then no further disclosure is
required. Accounting standards prescribe in considerable detail what accruals must be made,
how the financial statements are to be presented, and what additional disclosures are required.
Some important elements that accounting standards cover include: identifying the exact entity
which is reporting, discussing any "going concern" questions, specifying monetary units, and
reporting time frames.[1]

Contents

 1Limitations
 2Benefits of accounting standards
 3Common accounting standards around the globe
 4Global standardization and IFRS
 5See also
 6References
 7Further reading
 8External links

Limitations[edit]
The notable limitations of accounting standards are their inflexibility, time-consuming process to
create them, the difficulty of choosing between alternative treatments and their restrictive scope.
[2]
 Accounting standards were largely written in the early 21st century. Massive accounting
irregularities at large firms such as Worldcom and Enron illustrate that, despite all these efforts,
widespread fraud can still occur, and even be missed by the outside auditors.

Benefits of accounting standards[edit]

The lack of transparent accounting standards in some nations has been cited as increasing the
difficulty of doing business in them. In particular, the Asian financial meltdown in the late 1990s
has been partially attributed to the lack of detailed accounting standards. Giant firms in some
Asian countries were able to take advantage of their poorly devised accounting standards to
cover up immense debts and losses, which yielded a collective effect that eventually led the
whole region into financial crisis.