Negative Effects of Adoption of International Financial Reporting Standards

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.

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

The IFRS is basically a set of accounting rules which are issued by the IASB based in London, UK. These accounting standards have originated from its predecessor IASC defining the term IAS, which occurred in the 70’s. it was only after 2000’s that the IASB took a strong hold under the label IFRS claiming to be a lot more independent even though pertaining to its predecessor, efficiently staffed and better funded. Caffermen and zeff (2006) discuss about the gradual spread of accounting has made a considerable progress over time, and with the adoption of IFRS worldwide, accounting procedures could be smoothened.

It has been in deliberation to whether all countries in the world would subject their accounting system under IFRS. As of 2013, there are more than 120 countries around the world necessitate or permit the use of IFRS. These efforts of convergence are to initialize the transparency and uniformity of accounting principles.

For nearly half a century, a movement has been underway to establish a high-quality, comprehensive set of international accounting standards, with the goal of facilitating international trade and investment. In the global capital market, differences in the rules of accounting for the purposes of recognition, measurement, and reporting of financial results have impaired the smooth transfer of information across borders. Given that it accounts for nearly a third of the global market, there is considerable pressure for the United States to conform to the International Financial Reporting Standards (IFRS), as promulgated by the International Accounting Standards Board (IASB). While moving to a single set of accounting standards could create

global standard allows them to operate in a single accounting environment worldwide (PricewaterhouseCoopers 2007). The globally positive attitude towards an convergence to IFRS is exemplified by an IFAC survey among

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).

The International Financial Reporting Standards (IFRS) is the accounting framework used by the European Union, Japan, Canada, and other world economic leaders. The IFRS is based on the tenets of understandability, reliability, and comparability. It is based off the International Accounting Standards (IAS) and had the opportunity to be built from accounting ideas and principles used across the world. In recent years it also has had the chance to look at the United States Generally Accepted Accounting Principles (GAAP) and modify the rules to enhance clarity and consistency, intentionally setting itself apart from U.S.

Political and economic forces shape accounting. The increased worldwide integration of politics and markets raises the necessity for integration of financial reporting standards. The integration is driven by the reductions in the costs of information processing and communication. International Financial Reporting Standards are a common business affair language in the globe for easier comprehension and comparison of company accounts across international boundaries (AICPA). The standards are issued by the International Accounting Standards Board. The IASB is a United Kingdom body that was established in 2001 and is based in London. The historical cost paradigm authorizes the IFRS except IAS 29 and AFRIC 7, which

There have been proposals that have been working on with regard to the replacement of GAAP (Generally Accepted Accounting Principles) with IFRS (International Financial Reporting Standards) as used in the accounting and financial reporting aspects. Such convergence requires that the functions of the GAAP standards be added to the IFRS. The International Accounting Standards Board (IASB) developed the IFRS which is a less-detailed financial reporting system.

The IFRS are made to be a common global language used for accounting and business in order for an organisations monetary situation is easily understood and interpretable between different countries (Eng, Sun & Vichitsarawong, 2014). For example, financial reporting in Saudi Arabia of an organisation may look more favourable than an Australian company, because of the different measures used by

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

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 country selected for this study is the United Kingdom (UK). UK Generally Accepted Accounting Practice (GAAP) has been in place for a long period of time and was harmonized in 2005 so as to comply with the international accounting standards. The UK embraced the principles of the International Financial Reporting Standards (IFRS) in 2005 after the European Union (EU) mandated that all members that were publicly listed companies be subject to reporting under the International Accounting Standards (IAS). This was to help facilitate that those listed companies could easily be compared to onr other on their performance and transparency was improved since they were now subject to the same principles of reporting. Companies in the United

(Horton et al., 2013) stated that the adoption of IFRS (IFRS) requires changes in the financial and accounting area, in most systems and processes, as well as in the area of human resources companies. The accounting policies in accordance with international standards are definite principles, techniques, sources, agreements and practices implemented by an enterprise in preparing and presenting financial statements IFRS IFRS-audited according to IAS and ISA-COSO internal control, putting in operation and economic good accounting for disclosure of general purpose accounting information