ABSATRACT

The research has been unfolded in seven chapters via:-

First Chapter: Introduction
1.1 General introduction
The evolution of Accounting, as with environment evolution, has lead to the
appearance of mores, principles and rules engrained in practicing till some of them
became acceptable by accountants such as double entry. But many of these mores,
principles have many alternatives, and there is no agreement on following one alternative
only. This has lead the disclosure being given the same treatment in different ways. This
in turn has made it difficult to compare the companies’ financial statements; it may lead
to adducing untrue data about the finance position and the profit or loss. So the need for
establishing Accounting Standards has became essential, by which the comparison will
be easy and it will reduce the chance of misrepresentation of data. With this view in
mines some of the professional Associations started to set standards in the local ambit.
In recent centuries the increased investment has increased the trade between the
countries, as well as the multinational companies. This makes a case for conjunction in
international economic relationships, and accounting patterns.
Political changes have increased the conjunction of such relationships which had
first appeared in the world in the ninth century and have support the enforcement of
globalization of stock exchanges.
All of that has had an influence on the evolution of accounting from two sides on
the one hand the importance of accounting data has been increased by the people who
deal with international stock exchanges from one side, and the users of accounting data
have increased locally and internationally from the other side. This lead to the beginning
of establishing accounting standards which will be flexible for local or international use.
Thus the territorial, continental and international authorities have been established to
make these standards. Enthoven said that the important steps for internationalization of
accounting have been achieved by establishing the International Accountants
Association, International Accounting Standards Committee and Europe Economic
Corporation (Enthoven, 1983:110).

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 Some of the undeveloped countries have started using standards which have been
issued by International Accounting Standards Committee as Local Standards or use it as a
base while formulating their own Standards.
To ensure proper understanding of financial statements, it is necessary that all
significant accounting polices adopted in the preparation and presentation of financial
statements should be disclosed.
Such disclosure should form a part of the financial statements, if they are all
disclosed as such in one place, instead of being scattered over several statements,
schedules and notes.
Any change in an accounting policy, which has a material effect, should be
disclosed. The amount by which any item in the financial statements is affected by such
change should also be disclosed to the extent ascertainable. Where such amount is not
ascertainable wholly or in part, the fact should be indicated.
The preparation of financial statements of Banking Companies depends upon
the understanding of the nature of banking activities, and the external factors which
influence these activities such as the laws and procedures laid down by the monetary
authorities which influence the fixing of interest rate, liquidity and the fiduciary limit
which affects the assessment of assets and liabilities.
The importance of disclosure in Banking Companies’ financial statements
comes from the nature of finance facilities in this sector, i.e. agent between the saver and
investor and its relationship with other economic activities.
In Yemen there is no single statement of Accounting Standard which should be
followed and the law is not strict on use the International Accounting Standard or
disclosure and there is no authority taking care of preparing such standards.
So the law stating the accounting practice includes only general instructions, this
information has been given by the study made by ‘Arthur Anderson’ on “The Accounting
Professions in Yemen” According to him the unique Accounting system which is applied
by the public sector, includes a few accounting standards only. But the private sector
follows international accounting standards in preparing and presenting their financial
statements (Arthur Anderson, 1996, third fillet: 1)

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 In India The Institute of Chartered Accountants of India which is one of the
members of the International Accounting Standards Committee (IASC) and has agreed to
support the objectives of IASC. While formulating the Accounting Standards, ASB will
give due consideration to International Accounting Standards issued by IASC and try to
integrate them, to the extent possible, in the light of the conditions and practices
prevailing in India.
As a result of this, many deficiencies have been observed in the accounting
performance. Some of these deficiencies are listed below:-
The availability of various accounting practices, has lead to the processing of
similar treatment, in many different ways which complicate the comparison of the
financial statements made according to different standards .Defrauding and cheating has
lead to the loss of community trust on the financial statements.
Hence this study seeks to clarify the importance of disclosure of accounting policies and
accounting standards by which the financial statements can be easily to understood by
their users and to evaluate the application of accounting standards disclosure
requirements of banking companies of Yemen as will as India.
1.2 Objectives of the study
1. To clarify the importance of disclosure of accounting polices adopted in
preparation and presentation of financial statements.
2. To state whether or not Yemen should set up its own standards.
3. To state whether India has to adopt International Accounting Standards (or not) in
view of globalization.
4. To ascertain the differences between Yemen and India in the filed of accounting
practices.
5. To find out whether financial statements of Yemen and Indian companies have
enough capability to be used for comparison.
6. To find out the appropriate suggestions to improve the accounting practices in
Yemen.

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1.3 Research Methodology
1.3.1 Sample Technique
This study has taken a comparative approach, comparing Indian Banking
Companies with Yemen Banking Companies as well.
1.3.2 Size of Sample
Since Yemen has few banking companies they have been taken as a whole with
out resorting to random sampling except Islamic banking companies as they are not in the
position of comparison with banking companies in India because their operation and
standards are so difference, so they have excluded.
Where as in the case of India, adequate Number of banking companies has been
chosen, by random sampling, 17 Banks out of the banking companies listed on
Recognized Stock Exchanges in India.
1.3.3 Scope of study
The study have confined to the examination of financial statements of Yemen Banking
Companies for the year ended on 31st December 2003.
In the case of India it took financial statements for the year ended on 31st March 2004.
1.3.4 Data Collection
This study is based on primary and secondary dada.
1.3.4.1 Primary Data
Primary data is directly collected from each respective Banking Company.
1.3.4.2 Secondary Data
Secondary data collected through documentary sources from different Libraries,
Magazines, Journals, in Yemen and India, rules and regulations for Banking Companies
and issues by International Accounting Standards Committee & Institute of Chartered
Accountants of India.
1.4 Study Hypothesis
1- A full disclosure of accounting policies leads to a realistic and fair assessment
of financial statements.
2- International Accounting Standards formulated by International Accounting
Standards Committee are appropriate both for India and Yemen while preparing the
financial statements.

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Chapter two: Survey of Literature
This chapter has focused on prescribed literature in the topic of this study, by study
books, journals, previous studies and internet. So it have divided into two part, first part
has survey Arabic literature in the topic of this study, and second part has survey English
literature in the topic related to this study. So all those literature indicated the important
of disclosure of accounting polices and accounting standards and showed how incomplete
disclosure harm all users, investors, and enterprises management etc.
Chapter three: A profile of IAS & AS
In this chapter comparison study between IASC and ICAI has been carried to clear the
profile of them by comparing their Establishment, Objectives, History, Old as well as
new Structure, Responsibilities, Organizational/Administration, and Operating Procedure
for Formulating Accounting Standards. So from the above comparison I have conclude
that while formulating accounting standards by International Accounting Standard
Committee, they give more consideration to the developed countries’ environment
requirements which make some of international accounting standards not suitable for
undeveloped countries environment. And in India they consider their environment while
formulating India AS in accordance with IAS which is more suitable for India.
Chapter Four: Disclosure Requirements of IAS & AS
For better understanding I have divided this chapter into two parts, first part comparison
between International Accounting Standards with India Accounting Standards, and in
second part comparison between rules & regulations issued by Yemen with rules &
regulations issued by India.
So in first part, each IAS as well as India AS has been analyzed indicating their purpose,
scope and disclosure requirements from which the limitation of some accounting
standards reached and stated the fact that the coordination between accounting standards
upon international level more acceptable according to harmonization of accounting
standards, so that will lead to eliminate variants of accounting treatments, and helping
decision makers by enabling them to compare financial statements of local and
international companies which will increase their confident about the fair view of the
truth of financial statements, this also will facilitate the international trade and
investments, and will reduce the cost of accounting information adjustments. And from

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the other side coordination allow the consideration of especial environment of each
country.
In Second part, a comparison study of the rules & regulations issued in Yemen & India
related to accounting practices carried out which indicate the limitations and weaknesses
of rules and regulations issued in Yemen from one side, and the other side indicate the
strength and wide cover of the rules and regulations issued in India.
Chapter Five: Analyses of Data and Testing of the Hypothesis
This chapter, analysis of financial statements of both countries’ banking companies so
selected i.e. Yemen banking companies and India banking companies with related
accounting standards applied to test the application of the accounting standards’
disclosure requirements. So the percentage of application of disclosure requirements has
been divided between applied, partly applied, not applied, no information and not
applicable for each AS in separate schedule which insure the cover of all possible result
can be found and presented by 15 charts for better understand.
The results of analysis of the application of disclosure requirements show the percentage
of the application of each IAS & India AS. The following schedule shows the total
application percentage of IAS by Yemen banking companies and India AS by India
banking companies:
Comparison between IAS application in Yemen and India AS application in India
Detail Applied Partly Not No Not
Applie Applied Informati Applicable
d on
International Accounting 28.7% 2.54% 6.8% 8.63% 53.33%
Standards (IAS)
India Accounting Standards 50.26% 1.48% 10.34% 10.34% 27.58%
(AS)
Differences -21.56% 1.06% -3.54% -1.71% 25.75%
So from the analysis done in this chapter the first hypothesis (A full disclosure of
accounting policies leads to a realistic and fair assessment of financial statements) has
been approved and unapproved the second hypothesis (International Accounting

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Standards formulated by International Accounting Standards Committee are appropriate
both for India and Yemen while preparing the financial statements).
Chapter Six: Discussion of study result, findings and limitations
This chapter includes result of the efforts spend in this study, as it discuses this study
result with literature studies in first part, study findings in second part as in this part
theoretical study findings as well as Practical study findings have been stated, and The
last part of this chapter highlighted Incomplete Disclosure's Impact on the users.
So the objectives of the study have been achieved by stating the findings and study
discussion. Comparison of each percentage of the application of IAS by Yemen banking
companies with each correspondent India AS application by India banking companies
which lead to state the application limitations of both countries.
Chapter seven: Recommendations and Conclusion
In this chapter I have stated the recommendations I think both countries most follow to
over ride their limitations and to improve their accounting practices. As I have give seven
recommendations for my country (Yemen) and nine recommendations in respect of India.
So this chapter finished by the following conclusion:
Through this study I came to know all the circumstances which lead to issue Accounting
Standards and their history development, so I have learned all the aspect of Accounting
Standards the procedures of issuing them, as I came to know all the theoretical and
practical aspects of International Accounting Standards (IAS) as well as Indian
Accounting Standards which rich my knowledge and professional ability in this subject.
And from study of accounting practices of Yemen and India I realized the limitations of
both countries in this filed and what they should do to over ride those limitations.

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