Define Accounting Procedure:

"Accounting procedure refers to the systematic and standardized process followed by businesses and entities in recording, summarizing, and reporting their financial transactions."

Explain Accounting Procedure:

Introduction:

Accounting procedure refers to the systematic and standardized process followed by businesses and entities in recording, summarizing, and reporting their financial transactions. As part of the G20, which consists of major economies from around the world, countries may have different accounting practices and regulations.

In this article, we conduct a comparative analysis of accounting procedures in G20 countries, exploring the commonalities and variations in financial reporting practices.

1.Regulatory Framework and Standards:

G20 countries often have diverse regulatory frameworks and accounting standards that govern financial reporting practices. Some countries follow local accounting standards, while others adopt International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

·      United States: The U.S. generally follows the U.S. Generally Accepted Accounting Principles (U.S. GAAP) for financial reporting. Some companies may also use IFRS for certain reporting requirements.

·      Japan: Japan has its accounting standards issued by the Accounting Standards Board of Japan (ASBJ). However, there is a movement towards convergence with IFRS.

·      China: China has its accounting standards issued by the Ministry of Finance, and there is an ongoing effort to converge with IFRS for listed companies.

·      Germany: Germany follows German Generally Accepted Accounting Principles (HGB) for financial reporting, and large listed companies often prepare consolidated financial statements using IFRS.

·      United Kingdom: The UK has its accounting standards, but many UK listed companies use IFRS for consolidated financial statements.

·      India: India has converged its accounting standards with IFRS, and certain companies are required to use Indian Accounting Standards (Ind AS) for financial reporting.

·      Brazil: Brazil has its accounting standards issued by the Comitê de Pronunciamentos Contábeis (CPC). There is an ongoing convergence effort with IFRS.

·      Canada: Canada has Canadian Generally Accepted Accounting Principles (GAAP) for financial reporting. Many publicly accountable enterprises use IFRS for consolidated financial statements.

·      Australia: Australia has Australian Accounting Standards for financial reporting, which are largely converged with IFRS.

·      France: France follows its own accounting standards, and large listed companies prepare consolidated financial statements using IFRS.

2.Financial Reporting Requirements:

Each G20 country has its specific financial reporting requirements for various types of entities. Publicly traded companies typically have more extensive reporting requirements, including quarterly and annual reporting, compared to private companies.

Some countries may require additional disclosures, such as information related to environmental, social, and governance (ESG) factors, in response to growing interest in sustainability reporting.

3.Auditing Standards and Practices:

G20 countries have their auditing standards that auditors must follow when conducting financial statement audits. These standards ensure the independence, objectivity, and quality of audit engagements.

Many countries also require that financial statements be audited by a licensed external auditor for listed companies and other large entities.

4.Challenges and Harmonization Efforts:

While the adoption of IFRS by many countries has improved comparability to some extent, differences in local accounting standards and reporting requirements continue to exist. Harmonizing accounting procedures globally remains a challenge due to varying legal systems, cultural differences, and national reporting practices.

Efforts towards convergence and harmonization are ongoing, driven by the goal of achieving consistent and comparable financial reporting across borders.

Conclusion:

Accounting procedures in G20 countries are influenced by local regulations, cultural practices, and accounting standards. While some countries have converged with IFRS to improve comparability, differences in financial reporting practices persist. Harmonizing accounting procedures globally continues to be a complex task, but it is essential for enhancing transparency, comparability, and confidence in financial reporting.

As the global business landscape evolves, efforts towards greater convergence and alignment with international accounting standards are likely to continue to improve the consistency and quality of financial reporting practices across G20 countries.