International Financial Reporting Standards 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

Fosbre, Anne, Ellen M. Kraft, and Paul B. Fosbre. "The Globalization of Accounting Standards: IFRS Versus US GAAP." Global Journal of Business Research. 3.1 (2009): 61-70. Web. 27 Mar. 2012.

Christopher S. Armstrong University of Pennsylvania Mary E. Barth Alan D. Jagolinzer Stanford University Edward J. Riedl Harvard University

Fosbre, A. B., Kraft, E. M., & Fosbre, P. B. (2009). THE GLOBALIZATION OF ACCOUNTING STANDARDS: IFRS VERSUS US GAAP. Global Journal Of Business Research (GJBR

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

Standardized reporting across firms from different countries would facilitate cross-border investment and the integration of capital markets (Hail, Luzi, et al). According to Beke (2011), Standardization implies the “elimination of alternatives in accounting for representing economic transactions and other events” (Angeloni). In essence, similar events and transactions would be reported in a similar manner, and vice versa. Having more comparable reports allows firms to make better-informed investment choices due to a better understanding of competing firms, which can lead to cost savings. Moreover, firms that have more comparable reports can better contract with suppliers and firms in other countries, and these contracts are more likely to be fully specified and enforceable. Studies also show that the adoption of IFRS reporting should be associated with an increase in market liquidity, as well as a decline in firms’ cost of capital (Hail, Luzi, et al.).

But there a certain limit of flexibility of this international standards for cover with all the differences accounting standard or accounting practices in between country. The IFRS is to increase the comparability of annual financial reports no matter oversea or domestic. This only can be success when the new set of accounting standard published by IFRS and adopting by country when only the cultural, economics, politics and other factors within the country change (Chen, 2009).

International Financial Reporting Standards (IFRS), represent the norms that were introduced by IASB. Being an independent organization that was not operational to earn profits, IASB, also known as, International Accounting Standards Board, incepted IFRS to facilitate public companies around the globe. IFRS presented a framework that served as a guide for these corporations directing them on preparation and disclosure of the financial statements. The International Financial Reporting Standards offered general guidance to the seekers concerning the financial statements. The standards never strived to set industry specific reporting principles or regulations.

This paper examined the relationship between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) and found that merging both accounting standards into one “worldwide” standard would be ideal for all investors. This paper analyzed GAAP and IFRS differences and similarities. A comparison and contrast of GAAP and IFRS was conducted. Discuss roadblocks to achieve “worldwide” accounting standards. GAAP and IFRS have to

Pace University | ACC 649 Contemporary Accounting Issues FALL 2016 | 70159 | Instructor: Dr. Kwang-Hyun Chung Research Proposal: Will the transition from U. S. GAAP to IFRS only have an effect on Financial Reporting? Abstract: The purpose of this research is to analyze if the transition from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) in the United States only has an effect on financial reporting. Throughout this paper, I will explain the advantages and disadvantages of adopting IFRS. Also, I will also identify the differences between both standards and how it affects other aspects of a company’s business operations. In essence, reporting under IFRS has its pros and cons but it is ultimately up to the Securities and Exchange Committee to fully implement what standard they want to U.S businesses to follow. Prepared by: Sharon Williams Introduction Over the last several years, the controversy of the United States adopting International Financial Reporting Standards (IFRS) has been a significant issue for many businesses who are pro Generally Accepted Accounting Principles (GAAP). Although U.S GAAP has been the common accounting principles for many countries, specifically the US, now countries are adopting IFRS. In addition, there are many organizations such as European Union (EU) and International Accounting Standards Committee (IASC), who want domestic and international businesses to have one

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

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

There is a clear roadmap to social globalization and convergence of US.GAAP – IFRS Standard as prescribed by the Security and Exchange Commission (SEC) for users that set up financial statements in accordance with IFRS as issued by IASB. This followed would lead to a worldwide adoption of IFRS over the next few years. In his work, Barry (2009, p.26-27) states, “The advantage of a single set of financial reporting standards are manifest, particularly as internationalization of business activities became the norm. In particular, having uniform, high quality standards has been extolled as fostering international business relationships, with the goal being the facilitation of cross border capital flows and lowering the cost of capital _ the expected results of the anticipated reduction of perceived accounting risk”.

The IFRS are superseding GAAP as the official reporting structure of many countries and as of July 2014, 283 have adopted the IASB’s new rule book (PricewaterhouseCoopers, 2014). The transition to IFRS has spawned a worldwide dialog of investors and analysts discussing the effects it will have on reporting and the implications this move carries into the future. This paper will review some financial reporting standards, the major distinctions between the U.S. GAAP and IFRS, and the competitive advantages and disadvantages of altering the U.S. reporting structure.

The chief objective of this report is to describe the advantages and disadvantages of International Financial Reporting Standards (IFRS) conceptual framework in general. The report also directs attention towards Australia’s step towards harmonization of the accounting standards and as well as on international financial reporting system. However, the prime focus of the report is on the adoption, implementation and the impact of IFRS framework in a developing country, Bangladesh. The very report advocates that the adoption and implementation of IFRS framework has both positive and negative sides. In spite of financial and time constraints in adopting IFRS every nation is keen towards being a member of IFRS accounting standards. It is because countries want to trade globally and for such purpose they need investors. In order to attract and retain such potential and existing investors firms/organization need to follow certain accounting standards in generating the financial reports that are accepted worldwide. Finally, the report concludes that the worldwide harmonization of accounting standards has many future benefits along with some short term obstacles, however, it is difficult to apply the same accounting standards worldwide as each and every country differs from another in respect of its enforcement mechanism.