Globalization Has Increased The Need For Foreign Investments

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

Access to capital markets in United Kingdom is easy after the adoption of IFRs. Public capital markets play an important role in financing the activities of non-financial companies in the United Kingdom, providing them with the main option to bank loans and private sources of finance. These set of international accounting standards helped reduce the information processing and auditing costs to the UK’s market participants. With the help of adoption of IFRS it is expected to lower information costs to capital markets, and the UK

States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for

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

IASB. 2010, "The Conceptual Framework for Financial Reporting" IFRS, pp. A21- A38, viewed 23 April 2014,

businesses remains bleak. Unfortunately, a single set of standards is desired by many groups across the globe, and it could be the best way to compare GAAPs across the globe. In an April 2015 study published by Tel Aviv University, researchers compared underpricing of IPO firms in countries that use IFRS to IPO firms that used domestic GAAP. This study found that “IFRS adoption can generate a positive externality by enhancing comparability, but only when coupled with high-quality enforcement or strong firm-level reporting incentives.” This indicates that while some countries would not experience improved comparability from IFRS adoption as a result of systemic corruption, the United States still has potential to reap the benefits from adoption, in spite of concerns from private

International comparability of financial statements attracts capital from foreign investors and reduces the barriers to cross-border capital flows. When international accounting standard replace domestic accounting standard, corporate discourse is reduced. This enables investors to monitor managerial performance better because information asymmetry is reduced. IFRS adoption made it easier for companies in U.K to access the capital markets (Lee, 2008).

In most of the countries accepting IFRS, include Continental Europe, IFRS pledge more comprehensive, accurate and timely financial statement information. Compared to unknown financial statement information from other sources, IFRS lower risk to investors. Investment professionals can forestall financial statement information from other sources, but most small investors couldn’t anticipate these information, in this case, IFRS enhancing financial reporting quality make small investors to compete better and decreases the risk. IFRS can lower the cost that investors spend on processing financial information by standardising reporting formats and eliminating international differences in accounting standards. Investors are more likely to gain from enhanced market efficiency, which can be done by decreasing the cost of processing financial information. Barriers of cross-border divestitures and acquisitions can be removed by decreasing international differences in accounting standards, this would benefit investors with enhancive takeover

Within the accounting profession, there have been challenges to develop a set of standards that are generally accepted and universally practiced. Thus far, the main debate in setting accounting standards is “Whose rules should we play by, and what should they be?” While the answer is unclear, users of financial statements and reporting must find methods that has an universal objective, that allows “Grapes for Grapes” comparisons that clearly, fairly, and completely prepares a company financial statements. For years GAAP has been the common set of standards and procedures for the U.S, the core for establishing a principle of reporting but now IFRS an international friendly financial reporting system has become popular for its use globally.

The purpose of this publication is to assist you in understanding the significant differences between International Financial Reporting Standards (IFRSs) and U.S. Generally Accepted Accounting Principles (U.S. GAAP). This publication does not discuss every possible difference; rather, it is a summary of those differences that we have encountered most frequently in practice, resulting from either a difference in emphasis or specific

Globalization has a great impact on today’s economy. The differences of accounting regulations and practices in various countries have become a noteworthy obstacle to globalization and economic development. International Financial Reporting Standards (IFRS) mitigates global business barriers. In order to adapt to the increasingly global business environment, public companies in Canada will move to IFRS by 2011. This movement will have a significant influence on Canadian business such as capital markets, financial statement preparers, the accounting profession, and even accounting students. Investors are eager to

International Accounting Standards (IAS) in effect since 2002 and International Board (IASB) together, provides the conceptual framework of financial reporting in the UK, in effect as of 2005. They have been working together to meet International Financial Reporting Standards (IFRS) issued by International Finance Committee (IFC) which have been endorsed by the EU. IFRS uses a principles approach designed to provide flexibility, transparency and comparability allowing a robust system in providing investors with relevant and reliable financial data, Randy, M (2014). In this essay, countries such as China and the US will be used as examples where the impacts, strengths and weaknesses will be analysed by comparing and contrasting their progress. As a result, a judgement will be made of which country has progressed well in converging to the standards and whether benefits can be seen to the country as a whole.

In the 6th edition, the financial statement samples of well-known companies give accurate information as to how a balance sheet is written. Because the statements were produced by a legitimate accounting entities, I believe the source was very useful for students who had to apply their accounting skills and knowledge onto a test or when preparing real financial statements for firms. There were only a few Canadian companies that adopted the International Financial Reporting Standards (IFRS) from the previous version of the book. The sources used were international financial statements of non-Canadian companies, which could marginalize Canadian readers since it was difficult for them to relate accounting practices to the latest international accounting system. If we were to publish the new edition, I recommend we include financial statements of Canadian companies that follow the IFRS, so readers can view how these companies adopted the new standard. The opportunity of using legal samples encourages more universities and academic institutions to use this book because the financial statements will be up-to-date and verifiable. With this minor addition, the new textbook will be modernized and further

It is becoming almost impossible to perform any professional accounting functions without being influenced by the International Financial Reporting Standards (IFRS) due to increasing number of international businesses. It seems that IFRS may become a more significant part of America’s financial reporting environment. However, today the public and private companies in America use Generally Accepted Accounting Principle in order to prepare their financial statements, but this will be changed due to universal set of standards. Therefore, in 2008 the Securities and Exchange Commission (SEC) issued a roadmap for the convergence by U.S. companies to the use of IFRS (Subler, 2012). One of those companies was Meeack Corp pharmaceutical company, but after very careful utilization of the IFRS, the company is not going to be converting to the IFRS. This paper is argued three reasons why to delay the convergence from GAAP to IFRS, and the three reasons are: Fundamental differences in accounting standards, federal and state law and regulations, and possible manipulations for financial reporting.

According to Alexander et al. (2011), stakeholders around the world uses information from financial statements in their decision-making process for many different purposes and it is almost the same on how they use the information in every country. However, there can be differences on the communication that information when different types accounting standards are used. Ball defines that “IFRS are accounting rules (‘standards’) issued by the International Accounting Standards Board (IASB), an independent organisation based in London, UK” (2006, p6). Therefore, they are set of rules where public companies globally should apply to when producing financial reporting. This essay will be looking further into how local institutional and economic factors influence arise with uniform standards while preparing financial reporting in different countries. Based on the findings, this essay will conclude that it is possible to produce uniform financial reporting with uniform standards with some changes to the current IFRS.