Accounting

FASB hold the notion that the reason behind the demand for the international convergence is principally due to the fact that the investors’ desire for comparable, high-quality financial information to facilitate easy decision-making. The main motivation is due to the capital markets that are increasingly going global. Once the boards defined the convergence, they have initiated the development of tactics meant to accomplish it and are in two documents, the memorandum of understanding as well as the Norwalk Agreement. Since the convergence was commenced, several setbacks as well as diversity in opinion have prevented the completion of the new standards. The majority of the stakeholders perceive the convergence as fundamentally a power struggle between the FASB and IASB. The high costs that are to be incurred in the switch from GAAP to IFRS are the other reason behind the challenges that the endeavor is being faced with (Bahaa & Ahmad, 2009).

In order to attain the consistency in accounting in Egypt, specialized courses need to help for the professional association relating to the application of IRFSs consistently with the expectations of the Egyptian local environment. There should be a connection between all the aspects of the professional institutions in relation to the application of the IRFSs. The audit firms should involve their employees in the developing of courses that relate to the application of the IFRSs as well as issues that are associated with the system. The Egyptian securities, as well as the stock exchange commission, should compel all the companies that are listed the stock market to ensure they apply the IFRSs (Katherine et al. 2009). The suggestion follows that the companies should be legally bound and that all the defaulters should be faced with legal sanctions. Success in the application of consistency in the international accounting relies on the availability of a firm international law which offers supports for the implementation of the process.

The draft model intends to recognize the revenue from the contracts it undertakes with the customers. The draft advocates for the inclusion of information that will assist the users of the financial statements to understand the nature of the revenue better as well as determine the value and timing of the revenues uncertainty. Additionally, it helps the users recognize the cash flows that result from the contracts with their customers (Katherine et al. 2009). The problems that the proposed draft include transferring the right to the control of the product to the customer as well as giving them the right to return the goods if dissatisfied. Offering warranties on the sale of their products to the customers although the nature of the safeguards normally varies in relation to companies, contracts as well as industries (Hussein, 2012).

The proposed draft comes with several benefits which include the provision of useful information to the clients using financial statements thus strengthening the disclosure requirements, as well as transparency in the financial statements. The draft also reduces the illustrating and explanatory instructions that should be included in all the revenue recognition cases. The similarity of accounting information has been strengthened. The size of the weaknesses, contrast, as well as consistencies, has also been reduced in relation to the revenue requirements recognition that is applied at present. The preparation of the financial statements has been simplified via the reduction of the requirements that companies should refer (Bahaa & Ahmad, 2009). Thus, the general position follows that the proposed draft offers a comprehensive methodology that aids in the recognition of accounting for revenue in terms of saying the when and how companies recognize revenue.

References

Bahaa Mohammed & Zaki Ahmad, (2009). "The impact of cultural differences within multinational organizations on global ability to communicate", the scientific journal of Economics and Commerce, Faculty of Commerce, Ain Shams University

Hussein Ali Morsy, (2012). " to reconcile the practice and accounting standards Egyptian and international in the field of accounting for transactions and operations in foreign currency and its impact on the degree of confidence in the financial statements and comparability "

Katherine A. Schipper, Catherine M. Schrand,Terry Shevlin, and T. Jeffrey Wilks, (2009). Reconsidering Revenue Recognition", Accounting Horizons, Vol.23, No.1. p.58

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