International accounting standards and Albania implementation: the changing accounting environment

Abstract

Accounting provides useful information to decision makers, thus as the business environment has changed so 
have the accounting standards that govern the presentation and disclosure of information. International 
Accounting Standards are central to this concept. International standards were first developed in the late 1960’s 
but they have reached their zenith of importance in today’s economic and business environment. It is also 
evident that governments and policymakers recognize this change. This point was made publicly when the 
European Council of Ministers passed a resolution requiring all EU companies listed on a regulated market to 
prepare accounts in accordance with International Accounting Standards for accounting periods beginning on or 
after 1 January 2006. This decisive change was met with great furor in the accounting profession as well as in 
corporate boardrooms. The International Accounting  Standards Board welcomed the resolution; pleased that the 
EU was among the first major “nation-states” to take the initiative and embrace international accounting 
standards. The EU recognized the many benefits of requiring the implementation of international accounting and 
auditing standards. Moreover, the Securities Exchange Commission (SEC) recently voted on a roadmap that 
requires U.S. public companies to use International Financial Reporting Standards by 2014. In light of the 
interests and activities of companies and users of financial information becoming global, the SEC released a 
statement declaring its involvement and support to develop a globally accepted, high quality financial reporting 
framework. The benefits of international accounting standards can be financial, economic and political. 
Preliminary evidence suggests that companies, lenders, and investors would prefer a convergence of domestic 
accounting standards with international accounting standards to create a quality financial reporting framework. 
Although there are significant benefits to implementing international accounting standards and it is increasing in 
importance there are still many challenges to further development and authoritative implementation. To best 
understand these challenges  one must look at the factors that influence the development of accounting 
regulations. Such factors can include, social and cultural values; political and legal systems; business activities 
and economic conditions; standard setting processes; capital markets and forms of ownership; and finally 
cooperative efforts by nations. These factors if properly understood can mitigate or even eliminate the challenges 
to international accounting standards. International accounting standards are important today and will most 
certainly become more important for the future as they are further developed.