Manipulation Of The Financial Statements

An increase in concentration of quoted companies on a relatively small number of stock markets requires a better equalisation of financial reporting framework. Globalisation of financial markets requires harmonisation of financial standards. In 1998, an agreement between IOSCO (International Organisation of Securities Commission) and IASC (International Accounting Standards Committee) on application of International Accounting Standards on American stock exchanges was consequently reached. Since then, the concentration of quoted companies that use American standards (US GAAP) or International Accounting Standards (IAS) has increased. According to NYSE information, in 1999, approximately 10% of companies disclosed their financial statements in accordance with IAS . The beginning of 21st Century recorded changes in the field of valuation. The traditional principle of valuation ?? the cost principle, originating from the past centuries ?? has, notwithstanding all reasonable resistance, been changed. Contemporary form of electronic trade requires provision of true and fair information on financial position and operation of companies in short intervals, for example, each day or every hour, etc. National and international committees (especially the American FASB or international IASC) prepared accounting standards in which they introduced the principle for evaluating assets and liabilities according to their fair value. The application of this principle primarily relates to investments in securities and their disclosure in the balance sheet. This principle mostly ??effects?? financial institutions such as banks and investment funds, the assets of which mostly comprise securities portfolios.