Assinment

The issue of adoption of international financial reporting standards (IFRSS) in Australia has been controversial issue since the first time Australian Financial Reporting council (FRC) announced the policy in 2002. Many believe that IFRSS adoption will lead to great advantages such as enhance financial report comparability, improve quality of financial reporting, attract more foreign investor, and other significant advantages. However, some also believe that the adoption merely result in disadvantages and cost for Australian business, accounting profession and even Australian government.

Epstein, Barry Jay. "The Economic Effects of IFRS Adoption." CPA Journal. (2009): 26-31. Web. 27 Mar. 2012.

The U.S is moving toward IFRS (Forgeas, 2008). In the near future, all US company may need to report financial statements under IFRS. This makes the adaptation of IFRS unavoidable. Recently, some large multinational

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

It has been shown through several studies that there is a link between the success of IFRS to enforcement mechanisms. Barth et al. (2008) assumes that without the existence of effective enforcement mechanisms, such as IFRS, you cannot achieve success.

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

Using IFRS detaches a business from the constraints of the national-level accounting standards and automatically makes financial reports acceptable in IFRS-compliant countries. This will also reduces cost significantly for UK companies as they will not need to prepare alternative financial reports when pursuing business interests in other countries, furthermore this will help foreign subsidiaries. An example of a UK based company that uses IFRS is Marks and Spencers (M&S Financial Report 2016, 2017). This company operates a large amount of subsidiaries both in the UK and EU, with over 1,382 stores worldwide, and therefore has adopted the IFRS standards to allow easier trading within these nations. While UK GAAP is still popular for many UK companies, adopting IFRS will reduce the need for M&S to prepare separate accounts for each subsidiary it owns (M&S Financial Report 2016, 2017). Having this capability increases competition as companies with the same accounting standards have

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.

The IFRS are made to be a common global language used for accounting and business in order for an organisations monetary situation is easily understood and interpretable between different countries (Eng, Sun & Vichitsarawong, 2014). For example, financial reporting in Saudi Arabia of an organisation may look more favourable than an Australian company, because of the different measures used by

The country selected for this study is the United Kingdom (UK). UK Generally Accepted Accounting Practice (GAAP) has been in place for a long period of time and was harmonized in 2005 so as to comply with the international accounting standards. The UK embraced the principles of the International Financial Reporting Standards (IFRS) in 2005 after the European Union (EU) mandated that all members that were publicly listed companies be subject to reporting under the International Accounting Standards (IAS). This was to help facilitate that those listed companies could easily be compared to onr other on their performance and transparency was improved since they were now subject to the same principles of reporting. Companies in the United

Only 31% of British listed companies see the move to IFRS as a real opportunity to improve their internal organization. The United Kingdom is therefore way behind the European average which stands at 57% and is focused very much on the costs

Some countries like the USA still refuse the implement the IFRS as they believe it will not give benefit to the country and for the reasons mentioned below. Because of this decision of the USA, some other countries have not continued to the implementation of IFRS yet.

While Hans Hoogervorst has a clear opinion on countries adopting the IFRS, we will have a look at a specific country that has recently taken in the IFRS to come up with our own decisions on whether it should be accepted in the U.S.. Canada’s

Second, the use of familiar accounting standards can increase foreign investors’ confidence in their ability to assess the foreign market and thus can lead them to invest more in the market (Amiram, 58-59). Business is now also much more complex than it was in earlier times. Contractual relationships are more complicated, and the financial instruments that companies issue to raise capital and hedge risks are far more sophisticated than the comparatively simple loans and stock shares that were issued and traded in preceding decades (IFRS). In its website the documents titled “Global Capital Markets and the Global Economy” IFRS mentions that these changes in economic and business activity are having and will continue to have major implications for the kinds of information investors will need from corporate reports in the future:

The outcomes on cost of capital required would be lowered as it improves the liquidity of the company within the market under the new regulations that is the IFRS. Many authors such as Daske et al. (2008) and Li (2010), along with Florou and Kosi (2009) have conducted studies to see if these results materialize in adopting the new jurisdiction. A study done by Li in 2010 shows that in 2005, the cost of equity has declined by 47% under the new regulations. Daske et al (2008) found mixed evidence about the effects of the adoption of IFRS. His study was based on the Liquidity of the capital market under the new regulation. In addition to this study, Florou and Kosi decided to look into another dimension by analyzing the impact of debt financing on capital markets. It was surprising to find that the yield was 39 basis points lower by companies that have adopted the International Standards.