International Financial Reporting Standards

International Financial Reporting Standards

Abstract

The International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international borders. It represents the general accounting conventions outlining the way transactional reports should be completed as well as stating the information to be included or eliminated. IFRS has provided businesses with a quicker way of conducting their operations. Although the IFRS has been considered by many businesses as a solution to a number of financial issues, a few see it as a basis of new challenges in the financial business world. This research will look to evaluate whether the IFRS lessens the level of clearness for financiers globally. It will discuss this concern by reviewing some of the rewards and deficiencies, as well as try to differentiate the IFRS standards from the US GAAP standards.

Table of Contents

Abstract 2

Table of Contents 3

Introduction 4

2.0 Advantages of adapting IFRS 5

2.1 Better Comparison 5

2.2 Flexibility 6

3.0 Disadvantages of adapting IFRS 6

3.1 Global Unacceptability 6

3.2 Manipulative 7

3.3 Cost 7

3.4 Increased Taxes 7

4.0 Conclusion 8

References 10

Introduction

Subsequent to the collapse of the stock market, the American Institute of Accounts (AIA) during the early 20th century proposed various ideologies that sought to revive the financial market. This led to the widespread use of the term, ‘financial statement’. In 1934, the Securities and Exchange Commission (SEC) was established with an aim of winning back investor’s. This was mostly achieved through encouraging companies to implement the LIFO practice, which enabled most companies to pay fewer taxes thus improving their profits. Succeeding the collapse of the stock market, a number of business personalities lost faith in the market (Zeff, 2005). The SEC provided new regulations to be considered in making financial reports; these strict rules by the SEC required companies to provide investors with appropriate financial reports, which essentially