International Financial Reporting Standards On The Workplace Essay

Despite those enormous advantages, it has been argued that IFRSS adoption lead to significant costs. The main argument is that IFRSs do not consider local needs and priorities as every country has their own ‘business environment, legal systems, cultures, language and political environment’ (Henderson and Peirson, 2000 cited from Malthus, S., 2004). However, to overcome this problem, IASB can accommodate flexible reporting standards that enable companies to choose alternatives that are more suitable for their external condition. It is opinion of some opponents of IFRS adoption that IAS is ‘insufficiently detailed’ (Uddin,M.S., 2005, p.4) that require accountants’ and auditor’ professional judgment. However, overly detail might be contra productive and not flexible in anticipating every changes and differences.

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

In September 2002 the IASB and the FASB agreed to work together, in consultation with other national and regional bodies, to remove the differences between international standards and US GAAP. (Dorata, 2008) However, the convergence of IFRS and FASB is coming to the end. (Golden, 2013)

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

It has been argued over years that Convergence of financial reporting is possibly one of the most important and controversial topics in accounting and corporate governance across countries, of which I could not wholly agree them. The Issue of the convergence of the National Accounting Standards with International Financial Reporting Standards (IFRS) among policy makers, standard setters, regulators, professional bodies, and companies worldwide has peaked up and widely been discussed lately. (Yu Chen & Zabihollah R 2012)

Our aim in this paper is to analyse and justify the facts that support and object the main issue of whether the mandatory adoption of International Financial Reporting Standards have in fact increased Financial Reporting Quality.

In a previous study on the usefulness of convergence, a comparison of firms implementing IFRS in 27 countries matched against sample of similar size and industry firms in the US found, the use of converged IFRS standard by US firms instead of US GAAP led to a more established accounting system with value relevance comparability (E.Barth, R.Landsman, Lang, & Williams, 2012, p. 6). In contrast, Jamal et al (2010) state “The need for a global accounting regulator is overstated. A global regulator is unlikely to help achieve the stated goals of comparability and consistency of financial reporting on a global basis” Based on the joint standard of IFRS15/ASU606 issued, there appears to be a compromise on both IASB and FASB’s part to include and exclude certain aspects therefore, although the gap is reduced, full convergence is far from being achieved. The decision makers at IASB therefore, due to inability to achieve the true goal of convergence, is resorted to undertake a vague position and compromise with the ‘allocation model’ (now known as ‘performance obligation’ model in the final joint standard issued) (Biondi, et al., 2014, p. 29). Nevertheless, in terms of usefulness to stakeholders, the joint standard addresses the problem arising from the original IAS18&IAS11/ASC605

Regulation is defined as a set of rules that is designed to control and govern conduct by authority (Deegan 2009, p.59). On the basis of this definition, Deegan (2009, p.59) has defined regulations relating to financial accounting as rules that are developed by independent authoritative body to govern the preparation of financial statements which are accounting standards. Since decades ago, there have been arguments for and against the existence of accounting regulations. With a stance of pro-regulation, this essay is going to examine the reasons that financial accounting and reporting should be regulated and the merits of accounting regulations.

This report has been compiled for the Chief Accountant of the Australian Securities and Investment Commission (ASIC). Its aim is to provide an analysis of how international financial reporting standards (IFRS) have improved reporting quality. This report found that there has been a recent move to using these standards as a blanket standard in most Western countries as the need for consistency in financial reporting is obvious in a more globalised world.

In the 1970’s there was an increase in discussions about unifying reporting procedures. With the increase of business dealings between companies in different countries the experts started to ask the question: “Why can’t we agree on a single reporting practice”? Now, logic would have it that anyone looking to invest in a company or do business with a company in another country should be able to look at their financial reports and make a sound decision. The problem arises when a company in the US is examining a company in Germany and the American company is unable to make a confident assessment of the financial standings of the company in Germany due to the dissimilarity in the financial records. The lack of transparency (and possible inaccuracies) suggests that it

The article is showing the relationship between IFRS adoption and the effect on the quality of the information in low investor protection countries. International Financial Reporting Standards (IFRS) is a set of accounting standards, developed and maintained by a not-for-profit organisation which is called International Accounting Standard Board (IASB) (http://www.ifrs.org/About-us/Pages/What-are-IFRS.aspx). The purpose of IFRS is to provide a global framework and also a general guideline to all firms such as public companies, so that they can prepare and disclose their financial statement globally. It is interpreted as it can provide the investors and other users (internal and external users) with financial statement that has ability to be compared with other company either within countries or overseas (http://www.ifrs.org/About-us/Pages/What-are-IFRS.aspx // http://searchsecurity.techtarget.co.uk/definition/IFRS-International-Financial-Reporting-Standards). It also uniting the capital market under one common reporting language and this would lead to produce high quality financial reporting across the world (ball,2006). This article has included 3 countries which in the low investor protection countries such as France, Germany and Sweden, in order to examine the effect of IFRS adoption on information quality. Besides, the three countries have different

With complete notion and awareness of how each country has their set of rules, “the goal of IFRS is to provide a global framework for how public companies prepare and disclose their financial statements” (Rouse, 2011). This view is meant to provide general guidelines, as well as international comparisons through conventional and edifying means. To bring broader and vivid objectives, IFRS replaced IAS, the older standards, in order to bring a more comprehensive and simplified accounting procedures.

During Transnet’s 2015 financial year they recognised revenue under IAS 18: Revenue. During the same financial year a new standard to account for revenue was issued namely IFRS 15: Revenue from contracts with customers. The reasons for issuing a new standard was because IAS 18 was broad and therefore lead to confusion and inconsistencies in the treatment of similar transactions. The new standard results in different accounting implications in the annual financial statements of Transnet. To evaluate the accounting implications of IFRS15 it must be compared with IAS 18. One major implication is the change from recognising revenue from services rendered by using the percentage of completion method that is stated in IAS 18. IFRS 15 recognises revenue either over-time or at a point in time.

Frieda, an accounting student, states: “Strategy analysis seems to be an unnecessary detour in doing financial statement analysis. Why can’t we just get straight to the accounting issues? “Explain to Frieda why she might be wrong.

This report aims to provide the executive directors and senior level management, of Fujitsu with a condensed insight into the potential use of the International Financial Reporting Standards (IFRS), as a substitute method of “corporate disclosure to its’ current reporting standards (GAAP)”, (American Institute of Certified Public Accountants, 2014). This report will analyse the primary benefits and limitations of adopting the IFRS as one of many accounting standards, thus ultimately aiming to provide a convincing recommendation as to its’ adoption and future application in Fujitsus’ operations and methods of financial reporting, (American Institute of Certified Public Accountants, 2014).