IFRS Adoption Essay

The first benefit of the conversion is comparability. Switching to IFRS would allow people to see various companies from different parts of world on the same plane. As willingness to trade increases, cross-border investment and integration of capital markets are easier with greater market liquidity and lower cost of capital. Investor bases would increase as the financial reports are becoming comparable. With better information, companies would be able to more effectively allocate their capital. Having one standard, however, does not guarantee comparability. With the same standard, practices and enforcement can differ considerably across firms and countries.

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.

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

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

The SEC has several aspects to consider when it comes to the adoption of IFRS in the United States. First, the SEC should consider the overall costs impact this will have on businesses. It is likely that it would cost billions of dollars in new reporting expenses for U.S corporations to implement IFRS. It would also require accounting firms to vastly change their education requirements. Second, the SEC’s main job is to protect investors from fraud on public exchanges. The commission must determine whether IFRS does a better job of protecting investors from unlawful activity.

In today’s business, markets are demanding increasing conformity. Many countries have converted to and implemented the International Accounting Standards Board (IASB)’s accounting standards. The United States, however, still maintains its own Financial Accounting Standards Board (FASB). Both IASB and FASB have created International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (U.S.GAAP) respectively. These accounting standards are rules of measurements for financial statements that companies issuing stock to the public must provide

IFRS 3-1 describe some of the issues the SEC must consider in deciding whether the United States should adopt

IFRS and GAAP are two separate sets of accounting used in different countries. ISAB created IFRS and they are hoping to create a set of universal accepted accounting principles for a better comparability between companies of different countries. IFRS is principal base while US GAAP is rules based. There are advantages and disadvantages to transition to IFRS from GAAP, and by comparing US GAAP and IFRS we noticed a lot of the same standards and concepts, but also some major differences.

It has been said that conceptually IFRS is more of a principles based accounting standard, while GAAP is more of a rules based accounting standard (Nguyen, 2010). There are both advantages and disadvantages to switching to IFRS from GAAP. Some advantages are: comparisons to foreign companies will be that much easier, and raising capital through foreign nations will be made easier because investors are used to seeing financial statements

For those in the business world, particularly in the accounting field, a major issue has surfaced in recent years relating to the differences between Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world follow International Financial Reporting Standards guidelines; however, the United States still uses GAAP. This topic has been a main focus because there is a plan for convergence between the two frameworks in the near future. The United States accounting system will undergo drastic changes when this occurs, but

When it comes to IFRS adoption challenges our research has shown that, while the U.S. adoption of IFRS may bring many benefits, several challenges must first be overcome. Some of the most notable of these challenges include the Security Exchange Commission’s apparent diminishing support, the sheer cost of implementation for corporations, overcoming the belief that IFRS adoption would sacrifice the “gold standard” of U.S. GAAP, and a lack of enforcement.

It is the greatest of times for over 100 countries worldwide, why you might ask? Well, because all of these countries have decided to implement the new standards of accounting, which is International Financial Reporting Standards (IFRS). However, the United States of America is one of the few large financial powers left in the world who hasn’t totally adopted IFRS. Indeed, fully adopting IFRS in America would bring countless additional benefits instead of conflicts. Also recent evidence shows that IFRS has been experiencing success worldwide in countries that have embraced it. Many say the biggest setback for the slow movement towards IFRS in America is the transition cost associated with adoption. However, I believe fully adopting IFRS including the business transition cost would be extremely beneficial for the future of America.

Like many other major accounting changes, the introduction of IFRS has been controversial. A common complaint has been that UK GAAP are already robust enough, and that it is the European regulators who need to pull their socks up. It will also be difficult (and expensive) for companies to provide five years ' worth of restated profit-and-loss accounts and that, for a while, investors will have little choice but to compare new-style accounts with old-style ones. In many cases, there will be little material difference. Given time it is also likely, especially in industries where IFRS may introduce a degree of volatility into accounts, that finance directors will conjure up still more variations on the profit measure to strip out market-driven fluctuations and get to an 'underlying ' number (http://search.ft.com/, 2004).