The Pros And Cons Of IFRS

Access to capital markets in United Kingdom is easy after the adoption of IFRs. Public capital markets play an important role in financing the activities of non-financial companies in the United Kingdom, providing them with the main option to bank loans and private sources of finance. These set of international accounting standards helped reduce the information processing and auditing costs to the UK’s market participants. With the help of adoption of IFRS it is expected to lower information costs to capital markets, and the UK

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.

The SEC has several aspects to consider when it comes to the adoption of IFRS in the United States. First, the SEC should consider the overall costs impact this will have on businesses. It is likely that it would cost billions of dollars in new reporting expenses for U.S corporations to implement IFRS. It would also require accounting firms to vastly change their education requirements. Second, the SEC’s main job is to protect investors from fraud on public exchanges. The commission must determine whether IFRS does a better job of protecting investors from unlawful activity.

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.

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.

International Financial Reporting Standards (IFRS) are an international set of accounting standards. Early in the 21st century, the Australian Accounting Standards board, with guidance from the Financial Reporting Council (FRC), decided to implement IFRS’s throughout Australia. This decision was made so that Australia could participate and contribute to the development of a distinct set of accounting standards that could be used all around the world.

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.

Although, many authors write about these huge incidents in America, few are discussed about the scandals abroad. Other countries (Switzerland, Italy, Greece and others) also have their issues with frauds and scandals, just not as wide spread. Therefore, the International Accounting Standards Board (IASB) seek to implement a single global accounting standard, called the International Financial Reporting Standards (IFRS) (Street, 2012). The IASB was actually established during the 1970s to promote a worldwide acceptance of regulations, accounting standards and procedures (Schroeder et al, 2011). In 2002, the FASB and IASB agreed that there is a need for an international reporting standard. Due to the high volume of international trade and foreign operations, the two boards, decided that there should be one global approach to accounting standards (Zeff,

The globalization of markets over the past 50 years has led to the demand for increasingly comparable financial statements across countries. In response to this demand, the International Accounting Standards Board (IASB) was formed with the purpose of developing a set of high quality global accounting standards. Although a majority of developed markets have adopted the international standards, the United States has not. One reason for the delay in adoption is that many of the standards are very similar. However, there are also several key differences between the two. Presently, the United States Financial Accounting Standards Board (FASB) and the IASB have

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

In this essay we discuss the development and adoption of the International Financial Reporting Standards (IFRS) in the Republic of Bulgaria. Most of the characteristics and features apply not only to this country, but also to most developing economies in Europe. The IFRS are a set of standards which imply rules, methods and governance for reporting and interpreting financial data. The purpose of the IFRS is to develop a set of universal standards to be applied and comprehended worldwide, in order to achieve harmonization and standardization among reporting entities.

This article introduces the International Financial Reporting System (IFRS) rules and practices, to the Czech Republic. The IFRS is a financial reporting system was established in an attempt to maintain stability throughout the financial community. Despite the conflicts with other countries’ accounting systems, the IFRS attempts to organize one financial standard system for businesses to report their financial statements. This article examines the relationship between domestic and global standards of accounting. The concept of developing a modern accounting standard in the Czech Republic, implies that most companies in that country are not willing to change their accounting standards.

The IFRS adoption started in 2002 with the European Union embracing with the AS regulation, as a way to increase the comparability between the countries and their financial statements. This required the European companies to be listed under the European Union securities market and make their consolidated financial statements in accordance with the International Financial Reporting Standards. Though this not only included the European members' state but also countries that belong to the European Economic Area (EEA); as a way to prepare their financial statements in a consolidated way in regards to the IFRS principles (Deloitte Global Services Limited, 2017). The EU has adopted the same directives in their accounting

Abstract: Globalization has increased the need for foreign investments. It has also increased the need for reliable and comparable information. Harmonization and comparability have brought forth the International Financial Reporting Standards (IFRS) created by International Accounting Standards Board (IASB), based in London. The IASB began in 2001, and by 2005 all publicly listed companies are required to prepare financials with IFRS (Guggiola, G, 2010). The IASB’s goal was to create a set of standards investors and other users were able to understand. IFRS is now used by most countries around the world. When companies grow, they need to raise money. To raise the money, they decide to go public. Public means sharing the risk of ownership to shareholders. This also means having stocks listed in the stock exchange.

Hans Hoogervorst is chairman of the International Accounting Standards Board (IASB), and his stand on the International Financial Reporting Standards (IFRS) has been firm for many years. With more than 100 nations that have implemented IFRS, it’s no surprise Hoogervorst believes the U.S should accept the IFRS and follow the steps of other leading market countries. By starting to allow public companies to volunteer their transition, Hoogervorst believes would be a step in the right directions (Lamoreaux, 2011). Since many of the U.S. trading partners have already accepted the IFRS, Hoogervorst finds it hard to imagine the U.S. not accepting it in the future (Lamoreaux, 20100).