Advantages Of The Adoption Of IFRS

Globalization has been changing the world. It has interconnected people, nations, and even businesses. Today´s business can share information to investors around the world thanks to the intelligent software of the actual society. Being more specific, the way in which investors and users evaluate businesses performance is through the information contemplated in their financial statements. These financial statements illustrate the current assets, liabilities, and stockholder equity a company has in order to help users take economic decisions. However, not all the companies are regulated to provide the same structuralized information around the world. Each country possesses its own accounting standard that regulates the preparation of financial statements of a company. In that way, companies’ information might differ between countries making the comparability between financial statements difficult to be implemented by users in order to assess the performance of foreign businesses. In view of the need of a globally accepted accounting standard that promotes uniform standards for worldwide financial reporting, the International Accounting Standards Committee (IASC), which then becomes replaced by the International Accounting Standard Board in 2001, was created (Cathey and Schroeder 130). The IASB issues International Financial Reporting Standards (IFRS) that stands as the set of accounting standards that prepare and present the financial

Despite those enormous advantages, it has been argued that IFRSS adoption lead to significant costs. The main argument is that IFRSs do not consider local needs and priorities as every country has their own ‘business environment, legal systems, cultures, language and political environment’ (Henderson and Peirson, 2000 cited from Malthus, S., 2004). However, to overcome this problem, IASB can accommodate flexible reporting standards that enable companies to choose alternatives that are more suitable for their external condition. It is opinion of some opponents of IFRS adoption that IAS is ‘insufficiently detailed’ (Uddin,M.S., 2005, p.4) that require accountants’ and auditor’ professional judgment. However, overly detail might be contra productive and not flexible in anticipating every changes and differences.

SEC will not require American companies follow IFRS at least until 2015. If they follow IFRS, accounting could become simpler and more flexible since the guidance of IFRS. (Frye, 2009) The foundation of IASB and the time of responses is questioned by a report from SEC. It also address it will be costly if American public companies adopt IFRS. (Rehm, 2011)

IFRS’s are a single set of accounting standards at a global level for all sectors. Accounting standards are trustworthy statements is the reflection of financial statements to be presented to the stakeholders . United kingdom has already adopted IFRS since 2005.I would be discussing on adoption of IFRS by United kingdom for this paper. The United

From Willmore (2015) research, a few studies have shown IFRS convergence is a hot issue within the accounting discipline; many people in the accounting and business join in on this topic. Majority agrees that IFRS is a more principles-based approach opposed to U.S. GAAP, a more rules-based approach. A source even stated American

IFRS is the internationally accepted accounting principle. Thus, international investors appreciate to invest in companies report under IFRS. As forecasted, Gabias Industries will have an increased sale in Africa, Europe and Pacific areas, where IFRS are the main accounting standard (AICPA, 2013). Similar to American domestic investors, international investors have more confidence on financial reports that are familiar to them. Therefore, reporting financial statement under IFRS will attract international investors to invest in Gabias Industries.

With the growth of international business there is a need to standardize financial statements globally. Presently there are “approximately 120 foreign private issuers currently that report to the Commission using IFRS financial statements.” By standardizing accounting practices investors will be able to make informed decisions based on comparability and accuracy of financial statements. The SEC released this statement in 2008, “We believe that IFRS has the potential to best provide the common platform on which companies can report and investors can compare financial information.” The SEC has created a “Roadmap” or plan to convert US GAAP over to IFRS. According to The Committee of

Over a decade ago, it was believed that the whole world would likely adopt the Generally Accepted Accounting Principles (GAAP). At the point in time, the International Financial reporting Standards (IFRS) was only about ten years old. In the last decade, the IFRS has been adopted in many growing countries. Currently, it is anticipated that the U.S. will converge its GAAP with the international IFRS, leaving behind only a modified IFRS. This may occur as early as 2014.

Before delving into the arguments against IFRS adoption, it is important to note that the U.S. economy and institutional framework have many idiosyncrasies. Hence, even if switching to IFRS proved beneficial for some countries, it would not necessarily be the same for the United States. To start, the United States possesses the largest economy in the world, and its public equity market accounts for a third of global market

Over 120 countries around the world already permit or even require public companies to use the new International Financial Accounting Standards IFRS. Among them are the EU, China, Russia, and Brazil. Canada and Korea are expected to adopt IFRS by 2012; Mexico will require all listed companies to adopt IFRS in 2012 (http://www.ifrs.com/ifrs_faqs.html#q1).

There are several differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). The IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team me collaborated to answer the following seven questions.

In 2001, The International Accounting Standards Board (IASB) was established to develop the International Financial Reporting Standard (IFRS). ). The first IFRS was issued in 2003 and European Union (EU) members committed for requesting all listing company to apply the IFRS in their jurisdictions and will effective on year 2005 (Brussels, 2000).

IFRS is a set of accounting standards promulgated by the International Accounting Standards Board (IASB), an international standard-setting body based in London. It was designed as a common global language for business affairs so that company accounts are comparable and understandable across international boundaries (Ghosh, 2010). In June 2002, the European Union (EU) adopted an IAS Regulation requiring European companies listed in an EU/European Economic Area (EEA) securities market to prepare their consolidated financial statements in accordance with IFRS starting in 2005 (United Kingdom).

Additionally, there will be a need for a global security force to apprehend offenders of the new standards. This could be a controversial problem in itself. The main issue, is to establish the standards first and get every public trading company to buy in on the idea of implementing the standards. Currently, many countries have agreed to adhere to the international standards. As more countries are adopting the IFRS, the U.S. has yet to agree to the standards. Even though the GAAP and IFRS resembles closely, there are still some issues to be worked out (Street, 2012). Eventually the U.S. will agree to the terms of the IFRS, once all the terms and conditions are in balance (Zeff,

The International Financial Reporting Standards (IFRS) is the accounting framework used by the European Union, Japan, Canada, and other world economic leaders. The IFRS is based on the tenets of understandability, reliability, and comparability. It is based off the International Accounting Standards (IAS) and had the opportunity to be built from accounting ideas and principles used across the world. In recent years it also has had the chance to look at the United States Generally Accepted Accounting Principles (GAAP) and modify the rules to enhance clarity and consistency, intentionally setting itself apart from U.S.