Negative Effects of Adoption of International Financial Reporting Standards

3627 WordsDec 27, 201015 Pages
Abstract The international accounting standards board (IASB) has replaced the international accounting standards committee (IASC) in 2001 and at the same time many standards of IFRS come from the International Accounting Standards which issued by IASC. After the new standards announce, the uptrend of globalisation has pushed more and more countries on their ways of adopting the international accounting standards. The drive for IASB is a British initiative and London is the headquarters for the IASB. Natural expectation would be that at least the British business will support a British initiative. The adoption of international accounting standards required GAAP used by the UK to ensure the consistency with the IASB’s IFRS. However, a…show more content…
Natural expectation would be that at least the British business will support a British initiative. In order to supporting the British institution, the UK companies firstly adopted IFRSs. The adoption of international accounting standards required GAAP used by the UK to ensure the consistency with the IASB’s IFRS. The second reason is that adoption of IFRSs could potentially lead to a more transparent and lower-cost global capital market. The UK might think that from aspect of accountant practice implementing IFRS could bring the benefit of reducing capital costs. As known the UK is a key capital of finances all over the world and with rapid development of global finance markets and requirement of international accordant accounting standards force accounting to be internationalization. Another reason is that in an era of globalization, the adoption of such IFRSs is increasingly desirable as it can provide greater comparability, consistency and transparency of financial information across countries and offer other benefits for investors, companies and capital markets. Also, Complying with such accounting standards will result in the production of financial reports that could be understood by the information users in the international markets. As Fajardo stated (2007 p57), because of better financial information, the
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