Title: A Critical Review Of The Fairness And Transparency Of The

Due Process Of Accounting Standard Setting

1.0 Introduction

Along with the growing awareness of the factors that influence the development of accounting,

there is also the fact that the accounting forms differ in different countries. Various forms of

accounting certainly can be classified based on the differences and similarities owned.

Accounting classification reporting system needs to be done to make the description, analysis

and prediction of the development of the accounting system. The purpose of classification is (1)

can help to determine the extent to which the system has similarities and differences, (2) forms

of development of the accounting system of a country than others and likely to change, and (3)

the reasons why a system has influence dominant compared to the others. Besides the

classification should also be able to assist decision making to assess the prospects and problems

in international harmonization issues.

International Accounting is accounting for international transactions, accounting principles

comparison among different countries and harmonization of accounting standards in the field of

tax authorities, auditing and other accounting fields. Accounting must evolve in order to provide

the necessary information in decision-making in the company on any changes in the business

environment.

Some characteristics of the existing global economic era in international accounting, among

others:
 International business

The loss of boundaries between countries, the global economic era is often difficult to

identify the country of origin of a product or company, this happens in multinational

companies.

Dependence on international trade

International Accounting Developments should have been accompanied by the ability of

individuals engaged in the field of accounting to contribute advance accounting. International

Accounting is a link between nations. Eight factors that influence the development of

international accounting should be well understood in order to create harmony between countries

that transact. Accounting standards and practices in each country is the result of a complex

interaction between the economic, historical, and cultural institutions. Can be expected to be the

difference between countries. Factors that influence the development of national accounting may

also help explain the differences in accounting between nations.

Malaysian accounting standards in force today refers to US GAAP (Generally Accepted

Accounting United Stated Standard), but in some of the provisions already adopted IFRS as its

harmonization. Adoption by Malaysia at this time nature is not yet complete, only some

(harmonization). In the current era of globalization requires an international accounting system

that can be applied internationally in every country, or required the harmonization of

international accounting standards. However, this harmonization process among other are

nationalism and cultural barriers in each country, differences in the system of government in
each country, the differences between the interests of multinational corporations with national

companies which influence the process of harmonization between countries, as well as high costs

for changing accounting principles.

The rapid information technology is the access for many investors to enter the capital market in

the world, this requirement cannot be met if the companies are still using the principles of

financial reporting different. American wearing FASB and US GAAP, SFAS his Malaysian wear

IAI, the European Union and the IASB's IAS wear. It lies behind the need for the adoption of

IFRS today. The adoption of international accounting standards into the accounting standards of

domestic aimed to produce financial statements that have high levels of high credibility, the

requirements will be item disclosure items will be higher so that the company's value will be

higher as well, the management will have a level of high accountability in running the company,

the financial statements of companies produce information more relevant and accurate, and the

financial statements will be comparable and produce valid information for the assets, liabilities,

equity, revenues and expenses of the company.

Malaysian Institute of Accountants (MIA) announced that the international accounting standards

(IFRS) will come into force in Malaysia in 2012 as a whole or full adoption. Hopefully Malaysia

has adopted IFRS overall, while specific to the banking sector is expected in 2010. With the

declaration raised concerns about the extent of adoption of IFRS can be applied in the Financial

Statements in Malaysia, how the adoption of suitable properties whether the adoption of all or

part (harmonization), and benefits for companies that adopt particular and for the Malaysian

economy in general, as well as how the readiness of Malaysia to adopt IFRS.

IFRS (International Financial Accounting Standard) is an effort to strengthen the financial

architecture and the global search for lasting solutions to the lack of transparency of financial

information. The purpose of IFRS is to ensure that the company's interim financial report for the

periods in the annual financial statements, contain high quality information that:

a) Produce transparency for users and can be compared throughout the periods presented.

b) Provide an adequate starting point for accounting based on IFRS.

c) can be generated at a cost that does not exceed the benefits to users.

Currently the national financial accounting standards are in the process of fully converged with

International Financial Reporting Standards (IFRS) issued by the IASB (International

Accounting Standards Board). Therefore, the preparation and development direction of

accounting standards in the future will always refer to the international accounting standards

(IFRS) is.

The role and benefits of harmonization or adoption of IFRS as standard domestic accounting:

1. The financial information that can be compared,

2. Harmonization can save time and money,

3. Facilitate the transfer of information to employees and facilitate the training of employees,

4. Enhance the development of domestic capital markets to the international capital markets,

5. Facilitate the conduct competitive analysis and operational useful to run a business and make

it easier to manage relationships with customers, suppliers, and others.

With the adoption of IFRS means that the financial statements speak with the same accounting

language, it will be easier for multinational companies to communicate with the company's

branches are located in different countries, improve the quality of management reporting and

decision making. By adopting IFRS also means increasing certainty and consistency in the

interpretation of accounting, so as to facilitate the acquisition and divestment. With the adoption

of IFRS the company's performance can be compared with other competing globally, especially

with the increasing global competition. Would be a liability for a company if it cannot be

compared globally, which means less capable in attract capital and generate profits in the future.

Malaysia need to adopt international accounting standards to facilitate foreign companies to sell

shares in this country, or vice versa. However, to adopt international standards was not easy

because it requires understanding and dissemination costs are expensive. Malaysia already done

so, but the new nature of harmonization, and will be conducted over the full adoption of the

international standards. The adoption of international accounting standards especially for public

companies. This is because public companies are companies that conduct transactions not only

nationally but also internationally. If there is a foreign company wants to sell shares in Malaysia

or otherwise, will no longer be disputed difference in accounting standards used in preparing the

report.

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