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Disadvantages Of IFRS Adoption

Decent Essays
Adoption of the IFRS in Europe

The IFRS adoption started in 2002 with the European Union embracing with the AS regulation, as a way to increase the comparability between the countries and their financial statements. This required the European companies to be listed under the European Union securities market and make their consolidated financial statements in accordance with the International Financial Reporting Standards. Though this not only included the European members' state but also countries that belong to the European Economic Area (EEA); as a way to prepare their financial statements in a consolidated way in regards to the IFRS principles (Deloitte Global Services Limited, 2017). The EU has adopted the same directives in their accounting
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Advantages and Disadvantages of implementing IFRS

Advantages
- Comparability in different markets all around the world (Paul & Burks, 2008).
- An easier outlook for the stockholders and shareholders for their decision making (Paul & Burks, 2008).
- There will be more applicability and flexibility in the implementation of the IFRS as it is principled based (Paul & Burks, 2008).
- It reduces financial recording density (Paul & Burks, 2008).
- The committee will have a more active position regarding the management of IFRS (Paul & Burks, 2008).
- It should increase the efficiency of the companies (Paul & Burks, 2008).

Disadvantages
- The small businesses in the US do not have the need to implement IFRS standards (Paul & Burks, 2008).
- Difficulties in system adaptation and implementation in companies that used to have another set of principles (Paul & Burks, 2008).
- The need to pay for the application of IFRS (Paul & Burks, 2008).
- The committee can change its opinion regarding these principles (Paul & Burks, 2008).
- The double entry books will be used for a length of two years prior to conversion from GAAP to IFRS (Paul & Burks, 2008).

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