The Adopting Process of International Financial Reporting Standard (Ifrs) on a Developing Economy

The issue of adoption of international financial reporting standards (IFRSS) in Australia has been controversial issue since the first time Australian Financial Reporting council (FRC) announced the policy in 2002. Many believe that IFRSS adoption will lead to great advantages such as enhance financial report comparability, improve quality of financial reporting, attract more foreign investor, and other significant advantages. However, some also believe that the adoption merely result in disadvantages and cost for Australian business, accounting profession and even Australian government.

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

We now want to look into the International Accounting Standards Board and framework for the preparation and presentation of financial statements. The conceptual frameworks are split into five categories and are in the following order: the objective of financial statements; underlying assumptions; the qualitative characteristics that determine the usefulness of information in financial statements; the definition, recognition, and measurement of the elements from which financial statements are constructed; and the concepts of capital and capital maintenance (Ankarath 11). The standards under IFRS are beginning to become much more popular across the world for several different reasons. The International Financial Reporting Standards are currently being used by at the very least 100 countries and “[was] expected that by 2011, more than 150 countries [would] have adopted them” (Ankarath 1). We happen to find this important because it seems that a lot of countries are starting to adopt IFRS to report their financial statements. One of the reasons why many countries made the switch over to IFRS is because “the decision of the U.S. SEC to allow foreign private issuers to list their securities on U.S.

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

A set of internationally recognized accounting standards facilitates capital flows across borders. Globally accepted standards make financial information readily comparable for its users. Foreign investors are more inclined to put money into a U.S. company if they are familiar with the company’s financial reporting. Conversely, U.S. investors will find it easier and less risky to invest in foreign companies when they know the local accounting standards (Epstein 2009). This will make U.S. companies and capital markets more competitive, since it saves costly reconcilition of different standards. Preparers, investors, auditors, and others will benefit from these cost effieciencies, since a Results of an IFAC Survey among accounting leaders around the world with respect to the importance of convergence to International Financial Reporting Standards for economic growth in their countries:

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.

In the report, the Staff points out six dominant issues, which arise with the Work Plan. Firstly, in order to converging IFRS effectively into the U.S. Financial Reporting System, the Staff, based on observations, indicates that IFRS needs adequate improvement on enhancing transparency of financial statements and reducing diversity during application process, which can greatly fulfill comparability of financial statements. Secondly, although the standard setting process of IFRS is commented as independent by most of reviewers, the Staff presents that IASB should improve one of components, which is timeliness, while further boosting IFRS standard setting process. It means that IASB should take more attention to enhance its timely manner on addressing rising issues of standard setting in order to accomplish the needs of investors. Thirdly, according to the observations and comments, the Staff points out U.S. investors show more

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”.

“International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB).” (IFRS 2011). IFRS establishes guidance for companies on how to prepare financial

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

The transition to the International Financial Reporting Standards (IFRS) has not been the easiest. Some counties have faced challenges. One big challenge is that not all countries have adopted IFRS. India, Japan and the US are top economic countries that have yet to embrace IFRS. If

The accounting profession worldwide has longed for the harmonisation of the various accounting codes practised by different countries. A set of international standards has been developed with help from the US, Britain, Ireland and the EU in general. International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the

The adoption of International Financial Reporting Standards [IFRSs] around the world has motivated empirical research that examines the effects it has on the accounting information. There is a visible contrast in these studies due to the use of various elements such as difference of researched countries, analysis periods, distinctive research design and reporting heterogeneous findings. Besides, there is also limited evidence of how the mandatory IFRS adoption affected the financial statements. Hence, this study provides comparative findings on the impact of IFRS adoption on the value relevance of reported accounting information in the UK.

As such, certain international bodies like the (IASB) International Accounting Standards Board having perceived the need for this revolution, is spearheading the initiative to harmonize international accounting standards worldwide. This paper seeks to analyze how developing countries especially in Africa are progressing with the International Financial Reporting Standards adoption and measures they are putting in place to protect against economic imperialism where they are forced to accept accounting standards with no cost benefit to them, but solely to the proponents of the standards, which for the most part is the West.