The For The Indonesian Financial Accounting Standards Board

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You are a recent accounting graduate working for the Indonesian Financial Accounting Standards Board (the “Board”). Your manager has asked you to prepare a report, which is to be presented to the Board. This report should: Executive Summary 1. Advantages As the development of globalization in economics in recent years, there is increasing popularity of IFRS. Based on the research(Shima and Yang 2012), there are more than 100 countries adopting the IFRS for their accounting standards. As IFRS could bring about varies advantages in comparison with other accounting standard. For Indonesian, there are three main factors encouraging it to adopt IFRS in terms of focusing on investors, transparency and comparability. 1.1 Confidence of…show more content…
As a result, it provides more clarity and guidance to user of financial statements. require more useful information than the national GAAP, 1.3 liquidity and Capital market For Indonesia, another significant benefit of adopting IFRS is that increased liquidity of market and lower cost of capital. Because acquiring IFRS could achieve harmonization of accounting standards. Since IFRS could enable companies from different market to measure the similar standard. Hence, the comparability of information improved for international investors and analysts Under the same standard, it allows for simpler cross-border investment in lower cost of capital and large liquidity (Tarca 2012) Moreover, due to the increased transparency and enhanced confidence of investors, companies of Indonesia could attract the foreign direct investment to boost their economic growth and increase competitiveness especially for the international organizations (Larson, R. K 1993). On the other hand, if using the different requirement for financial statement, it may pose challenges in the analysis and make decision properly. Disadvantage: Cost: Transition cost is a significant factor discoursing the adoption of IRFS for Indonesia. Fany (2015) states that Indonesian small and medium companies are

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