Financial reporting has the responsibility of communicating the economic situation and operation of a company. This must be precise, reliable and compliant with accounting standards. Effective financial reporting is essential to maintaining confidence in an economy and encouraging investors to invest. Towards the end of 2008, the financial sector across the world was becoming increasingly unstable. Lehman Brothers was declared bankrupt. Various allegations regarding accounting standards have been made in relation to the financial crisis. Many banks around the world have valued most of their financial assets at historical cost, the cost at which the assets were originally purchased. These figures were not adapted to current market values ​​and were therefore overestimated in the financial accounts. The “incurred loss model” has also been heavily criticized. This model required that only losses be recorded that would have a detrimental effect on future cash flows. The harmful consequences should be estimated reliably. This model failed to recognize the effects of future losses, which was one of the reasons why losses were significantly underestimated. If these banks had valued their financial assets at fair value, the companies' accounts would have given a more realistic picture. profits and losses, and perhaps the crisis would have been recognized sooner. Off-balance sheet standards have also been accused of covering corporate losses. Off-balance sheet assets/liabilities are those that are exempt from appearing on the balance sheet. It has been argued by the Financial Crisis Advisory Group that off-balance sheet standards may have hidden losses, therefore...... middle of paper ...... risk factors. In response to the financial crisis, boards of directors have been advised to emphasize to companies how crucial it is that the quality of data recorded for financial reporting is of a high standard. A global convergence of accounting standards is more imperative than ever, as financial markets are now global markets. A uniform set of accounting standards around the world would improve transparency, encourage efficient allocation of resources and enable the recognition of risks. Currently, more than 100 countries have adopted IFRS (International Financial Reporting Standards). The Boards of Directors have advised economies that have not adopted IFRS to set a practical timetable for the adoption of these standards. It is not only vital to converge, but also to maintain common solutions and interpretations between economies..