IFRS: The Threats Of The International Financial Standard Reporting

Although the International Financial Standard Reporting (IFRS) of the International Accounting Standard Board has gained strong support worldwide, IFRS should not be adopted as a global reporting standard. First, the IFRS adoption does not cause rising of globalization, as it supporters may have claimed. Second, IFRS is not superior to other national general accepted accounting principles (GAAP), in particularly to the U.S. rules-based GAAP. Third, IFRS fails to deliver uniformity as a single-set globalized standard.
IFRS and Globalization There are insufficient empirical studies to show that the increasing in transnational transactions, or globalization, has been contributed by IFRS. Globalization has mainly driven by profitability, feasibility, and cost-effective incentives, not IFRS. It is true that IFRS adoption has provided financial statements comparability and better disclosure for companies within its jurisdictions. However, at best, IFRS facilitates the process for comparable financial reporting among companies and influences corporate decision making, but it is not one of the causes for increasing cross-borders investments. Globalization creates the need for IFRS, not the other way around.
IFRS and U.S. GAAP It is undeniable that IFRS has significantly improved financial reporting in many countries that have converted to …show more content…
With countries’ reservations for full adoption and convergence of IFRS standards – not to mention that each country adopts and develops its own version of IFRS -- fails to set IFRS as a-single-set globalized accounting. Moreover, because divergence such as institutional and regulatory differences continues to dictate financial reporting practices, guidelines, and frameworks, true comparability is