The Pros And Cons Of International Accounting Standards

Pros and cons of international accounting standards International Accounting Standards were published by the International Accounting Standards Committee on 1973. However, starting from 2001, the International Accounting Standards Committee has been restructured and renamed as International Accounting Standards Broad. The new accounting standards establish after 2001 and all of the International Accounting Standards published before are categorized under International Financial Reporting Standard. Nowadays, approximately 100 counties have adopted the International Financial Reporting Standards. With a single set of accounting standards, financial statements can become more consistent, and it is more easily and conveniently to compare financial reports across different countries for the creators, investors, and regulators. Nonetheless, there are several disadvantages when applying the International Financial Reporting Standards such as manipulation of financial performance, implementation cost, and time factor. Under IFRS, companies can report their financial performance on principles-based set of accounting standards, which allows more flexibility. Clearly defined principles provide many advantages as a basis of accounting, including allowing preparers the …show more content…
The article “The Effects of Mandatory IFRS Adoption,” describes that “Increasing the level of disclosure or transparency can decrease information asymmetry between investors and increase market liquidity” (Mohammadrezaei, F., Mohd-saleh, N., & Banimahd, B. (2015). International Financial Reporting Standards create strength of reporting incentives for a firm and country’s enforcement system. It is not enough for a country to adopt a new accounting standard by just enforce it, and it requires management incentives and institutional factors in framing the characteristics of financial