InternAccting_Wk4Discussion

InternAccting_Wk4Discussion - Discuss the factors that...

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Week 04 Discussion - Foreign Companies Listed on U.S. Exchanges Read the following case and then discuss your thoughts with classmates: An imaginary new country called Mazoa is attempting to create a capitalistic society with free markets but maintain some discretion over price control and market regulation. Since the country is new, private enterprise is generally not controlled by the government and accounting standards do not currently exist. Leaders of the private sector and government officials are meeting in an attempt to determine the best course of action in regard to accounting standards. Some have suggested adopting international accounting standards while others want the country to develop their own standards because IFRS is not suitable for Mazoa's fragile economy. Regardless of what step is taken, accounting standards must be developed to show the rest of the world that Mazoa has a stable economy and to encourage foreign investment. Based on the above scenario, what type of accounting system would you recommend for Mazoa?
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Unformatted text preview: Discuss the factors that would influence your decision. Given the information that was provided, and taking into consideration that IFRS is not suitable for Mazoa’s fragile economy, I would suggest that they set up their own accounting system first. This would give Mazoa the time to grow their economy into a more suitable position (to gain more resources) where the strain of keeping up with rules and regulations would not destroy their economy. I do believe that once the economy is strong enough to bare the strain that at that time, Mazoa should adopt and conform to international accounting standards. Having Mazoa adopt an international accounting system before creating their own, would put undo strain on an undeveloped economy. If Mazoa were to adopt international accounting system first, before testing to see which system works best for them, it would be like putting a child behind the wheel of the car and telling them to drive....
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