Advanced Accounting Theory Essay Example | Topics and Well Written Essays - 500 words

Advanced Accounting Theory - Essay Example It implies that a company is governed by the accounting standards and principles of the jurisdiction(s) within which it operates. Similarly, the preparation of its accounting reports is limited only by the GAAPs of the jurisdictions within which it operates. One of the arising issues when it comes to GAAPs is the need for a single set of GAAPs. This concept is discussed, with preponderance for the establishment of such a set of global GAAPs. As it has been noted, one of the most significant notions, that is rather thematic of GAAPs, is the concept of jurisdiction. GAAPs operate within a particular jurisdiction, which may be a country, or an economic bloc, such as the EU. Traditionally, GAAPs tended to have the country as the highest territorial level delimiting their jurisdiction. This scope of jurisdiction tended to suffice, owing to the fact that most companies operated within a single nation. However, with increasing internationalisation, and the establishment of economic blocs such as the EU, there was need to establish a more comprehensive set of principles, in order to harmonize financial reporting. Such harmonization was desirable, in lieu of the fact that companies now operated within many different nations. Indeed, the EU has established several directives such as the 4th and 7th directives on company accounts (Elliott & Elliott, 2013). The question that then begs is, can the same scenario be replicated on a gl obal scale? One of the most significant trends is the globalisation of among other things, business activities. This globalization is not only in terms of firms reaching out to new markets, more increasingly, it is about such companies outsourcing their labour and ultimately, entire production processes. Since the countries are not within the same jurisdiction, territorial or otherwise, this implies that operations within different countries are subject to different accounting treatment. The