Standard accounting practices require publicly-traded companies to follow certain accounting rules when presenting financial statements

Financial statements

A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...

 so that the readers of the statements can easily compare different companies. Private companies are also often required by bank

Bank

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

s and shareholder

Shareholder

A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....

s, for example, to present information according to their specified rules.

Usually, countries practicing civil law

Civil law (legal system)

Civil law is a legal system inspired by Roman law and whose primary feature is that laws are codified into collections, as compared to common law systems that gives great precedential weight to common law on the principle that it is unfair to treat similar facts differently on different...

 system write standards into law and countries with English

England

England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

 common law

Common law

Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...

 systems have private organizations to set the rules.

Common accounting standards

Some commonly used accounting standards include:

• Generally accepted accounting principles (India)
• Generally accepted accounting principles (United States)
• Generally accepted accounting principles (United Kingdom
  United Kingdom
  The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
  
  )
• Grundsätze ordnungsmäßiger Buchführung (Germany)
• Chinese Accounting Standards
  Chinese accounting standards
  Chinese accounting standards are the accounting rules used in Chinese state-owned corporations in mainland China. They are currently being phased out in favour of generally accepted accounting principles or International Accounting Standards....
  
   (China
  China
  Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
  
  )
• International Financial Reporting Standards
  International Financial Reporting Standards
  International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
  
   (international)

Rationale for uniform practices

The lack of transparent accounting standards in some nations has been cited as increasing the difficulty of doing business in them. In particular, the Asian financial meltdown in the late 1990s has been partially attributed due to the lack of detailed accounting standards. Giant firms in some Asian countries were able to take advantage of their poorly devised accounting standards to cover up immense debts and losses, which yielded a collective effect that eventually led the whole region into financial crisis.

Limitations

The accounting scandals

Accounting scandals

Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations...

 of the early 21st century, which affected companies such as Worldcom and Enron

Enron

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...

, have shown the limitations of accounting standards in the United States.