An analysis of IFRS
Introduction
This essay aims to answer the following three questions: How does International Financial Reporting Standards (IFRS) enhance accountability and to whom? What are the objectives and benefits of adopting IFRS? And why might a nation may choose not to adopt IFRS?
Questions
1.How does IFRS enhance accountability and to whom?
Firstly, IFRS bring transparency by enhancing the international comparability and accuracy of financial information, authorizing investors and other market participators to make informed economic decisions. Secondly, IFRS strengthen accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. These provide information …show more content…
IFRS were designed mainly for developed and matured capital markets. The Regulation’s objectives were to improve transparency and comparability, better functioning of the internal market, the efficient and cost-effective functioning of the capital market, the protection of investors and maintenance of confidence in capital markets, and to help EU companies compete on an equal footing for capital within the EU and on world capital markets.
By adopting IFRS, a business company can illustrate its financial statements on the same basis with its foreign competitors, this may make comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be likely to use one accounting language company-wide. Companies also may need to transfer to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. In addition, if companies wish to raise capital abroad, they may benefit by using …show more content…
Why might a nation may choose not to adopt IFRS?
Since there are many differences of the national conditions between different countries, such as socio-economic, cultural and political environment differences, despite the variety of benefits of adopting IFRS and nearly 120 countries presently use IFRS in the world, there still are some nations may choose not to adopt IFRS. For these countries, it seems that the local situation forces much more than global. The standards change from country to country, and region to region.
Giving an example of Africa, many international organizations have all been arguing for the adoption of IFRS in less developed countries. According to Solomon (2012), accounting for double standards and the uniformity factors are also considered. He argued that it is not suitable for Africa to adopt IFRS. To a large degree, there is a great diversity in different continents. Africa has 54 states, each of them is under different circumstances, it’s very difficult for them to have a united voice and agreement. In addition, the cost of IFRS implementation may be much more than the benefits. Many countries also compare the local standards with IFRS together to seek how big of the differences gap between them and whether it is worthy adopting IFRS or
Introduction
This essay aims to answer the following three questions: How does International Financial Reporting Standards (IFRS) enhance accountability and to whom? What are the objectives and benefits of adopting IFRS? And why might a nation may choose not to adopt IFRS?
Questions
1.How does IFRS enhance accountability and to whom?
Firstly, IFRS bring transparency by enhancing the international comparability and accuracy of financial information, authorizing investors and other market participators to make informed economic decisions. Secondly, IFRS strengthen accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money. These provide information …show more content…
IFRS were designed mainly for developed and matured capital markets. The Regulation’s objectives were to improve transparency and comparability, better functioning of the internal market, the efficient and cost-effective functioning of the capital market, the protection of investors and maintenance of confidence in capital markets, and to help EU companies compete on an equal footing for capital within the EU and on world capital markets.
By adopting IFRS, a business company can illustrate its financial statements on the same basis with its foreign competitors, this may make comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be likely to use one accounting language company-wide. Companies also may need to transfer to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. In addition, if companies wish to raise capital abroad, they may benefit by using …show more content…
Why might a nation may choose not to adopt IFRS?
Since there are many differences of the national conditions between different countries, such as socio-economic, cultural and political environment differences, despite the variety of benefits of adopting IFRS and nearly 120 countries presently use IFRS in the world, there still are some nations may choose not to adopt IFRS. For these countries, it seems that the local situation forces much more than global. The standards change from country to country, and region to region.
Giving an example of Africa, many international organizations have all been arguing for the adoption of IFRS in less developed countries. According to Solomon (2012), accounting for double standards and the uniformity factors are also considered. He argued that it is not suitable for Africa to adopt IFRS. To a large degree, there is a great diversity in different continents. Africa has 54 states, each of them is under different circumstances, it’s very difficult for them to have a united voice and agreement. In addition, the cost of IFRS implementation may be much more than the benefits. Many countries also compare the local standards with IFRS together to seek how big of the differences gap between them and whether it is worthy adopting IFRS or