Preview

Negative Effects of Adoption of International Financial Reporting Standards

Powerful Essays
Open Document
Open Document
3612 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Negative Effects of Adoption of International Financial Reporting Standards
Abstract
The international accounting standards board (IASB) has replaced the international accounting standards committee (IASC) in 2001 and at the same time many standards of IFRS come from the International Accounting Standards which issued by IASC. After the new standards announce, the uptrend of globalisation has pushed more and more countries on their ways of adopting the international accounting standards. The drive for IASB is a British initiative and London is the headquarters for the IASB. Natural expectation would be that at least the British business will support a British initiative. The adoption of international accounting standards required GAAP used by the UK to ensure the consistency with the IASB’s IFRS. However, a concern is that there are substantial differences among different countries in implementation of IFRS and the notion that uniform standards will produce uniform financial reporting will cause some problems in the practical operation of accounting. As stated in the case the IASB is facing serious challenges from its home front. This essay focuses on the discussion of impacts of the adoption of IFRS, such as effects of fair value accounting, which will be analyzed and clarified. keywords: International Accounting Standard Board (IASB); International Financial Reporting Standard (IFRS); Fair Value Accounting; Scientific Approach; Naturalistic Approach; Normative Theory; Positive theory.

Introduction
In recently years, as the rapid increase of global economic, the competition between the international businesses is getting more and more furious. A large number of countries try to find a way to be more competitive, so the multinational trading businesses are largely developed. Even though the businesses can get much commercial opportunities from the international trading, the difference of the accounting standards between the multinational businesses is a big problem, such as, the issue of selection of the accounting standards of
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Comparing the Gaap and Ifrs
    • 1065 Words
    • 5 Pages

    Comparing the Gaap and Ifrs

    There have been proposals that have been working on with regard to the replacement of GAAP (Generally Accepted Accounting Principles) with IFRS (International Financial Reporting Standards) as used in the accounting and financial reporting aspects. Such convergence requires that the functions of the GAAP standards be added to the IFRS. The International Accounting Standards Board (IASB) developed the IFRS which is a less-detailed financial reporting system.…

    • 1065 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Where Does the Us Stand on the Adoption of Ifrs?
    • 1356 Words
    • 6 Pages

    Where Does the Us Stand on the Adoption of Ifrs?

    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 committed to work together to develop future standards jointly (FASB, 2011). Nonetheless, the key differences will have to be resolved and many believe the FASB will ultimately adopt international standards completely. This report seeks to discuss the US situation on the adoption of IFRS (International Financial Reporting Standards, as prescribed by IASB) and the possible effect of adoption on non-public businesses and the public?…

    • 1356 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Comparing IFRS to GAAP
    • 889 Words
    • 3 Pages

    Comparing IFRS to GAAP

    In the Accounting industry, there are various principles and guidelines by which financial accountants, analysts, and organizations need to abide by. The International Accounting Standards Board (IASB) issues standards (IFRS) that have been adopted by the United States and several countries outside of the U.S. (Kimmel, Weygandt & Kieso, 2010). The IFRS along with Generally Accepted Accounting Principles (GAAP), professionals in the accounting industry use these guidelines as a baseline on which accounting practices are built upon. These standards are governed by the Securities and Exchange Commission (SEC) which ultimately oversees U.S. financial markets and accounting standard-setting bodies. Moving forward, the elements of IFRS and GAAP will be discussed to illustrate the similarities and differences and how it relates to Accounting and used in business practice.…

    • 889 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Gaap vs Ifrs
    • 6672 Words
    • 27 Pages

    Gaap vs Ifrs

    The generally accepted accounting principal (GAAP) and international financial reporting standard (IFRS) are standards governing how economic events are reported. In the United States, the Securities and Exchange Commission (SEC) relies on the FASB, the accounting standard-setting body of the US, to develop accounting standards that public companies must follow when publishing financial statements. On the other hand, many countries outside of the Unite States have adopted the International Financial Reporting Standard (IFRS) which is issued by the International Accounting Standard Board (IASB). In recent years, the FASB and IASB have worked closely to try to minimize the differences in their standards and principals and to merge the two systems in the future.…

    • 6672 Words
    • 27 Pages
    Powerful Essays
    Read More
  • Better Essays

    Financial Statements Ifrs vs. Gaap
    • 1606 Words
    • 7 Pages

    Financial Statements Ifrs vs. Gaap

    For those in the business world, particularly in the accounting field, a major issue has surfaced in recent years relating to the differences between Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world follow International Financial Reporting Standards guidelines; however, the United States still uses GAAP. This topic has been a main focus because there is a plan for convergence between the two frameworks in the near future. The United States accounting system will undergo drastic changes when this occurs, but in the long-run the idea is to simplify the accounting procedures around the world. “Through these projects, some covering major components of the financial statements, the boards intend to improve financial reporting information for investors while also aligning US and international accounting standards. These projects are a significant move toward achieving a common accounting framework, a necessary step in the globalization of business and investment” (PriceWaterhouseCoopers LLP, 2011). The main difference between GAAP and IFRS is that GAAP is considerably rule-based, whereas IFRS is more principal-based which means IFRS has room for interpretation. The specific differences are far too many to cover in a short presentation, however, an explanation of some major differences are mentioned below.…

    • 1606 Words
    • 7 Pages
    Better Essays
    Read More
  • Better Essays

    Acc 403 Generally Accepted Accounting Principles (Us Gaap)
    • 1029 Words
    • 5 Pages

    Acc 403 Generally Accepted Accounting Principles (Us Gaap)

    IFRS are International Financial Reporting Standards issued by the International Accounting Standards Board (IASB). Nearly 100 countries use or coordinate with IFRS. These countries or groups of countries include the European Union, Australia, and South Africa. While some countries require all companies to adhere to IFRS, others merely allow it or try to coordinate their own country’s standards to be similar. The IASB is working toward this goal in a partnership with some of the most influential accounting standard-setters across the globe. Because of globalization, it is paramount that the world markets be on one accord in…

    • 1029 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    GAAP vs. IFRS comparison
    • 1254 Words
    • 6 Pages

    GAAP vs. IFRS comparison

    Through this course we have been taking a closer look into the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The book lays out the major similarities and differences between the two separate but equal accounting methods. I say, “Equal”, in the sense that the IFRS and GAAP accounting methods are two different ways that the any company that could come to the conclude the financial statements for any such accounting period. The differences that have apparent between the two methods, GAAP is only used in companies that have been started in the United States, whereas internationally IFRS has been adopted by those prospected companies.…

    • 1254 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Better Essays

    Ifrs and Gaap Convergence Paper Essay Example
    • 1088 Words
    • 5 Pages

    Ifrs and Gaap Convergence Paper Essay Example

    Company’s need an accurate and reliable financial accounting systems not matter if globally or in the United States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for similarities and differences.…

    • 1088 Words
    • 5 Pages
    Better Essays
    Read More
  • Good Essays

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    • 693 Words
    • 3 Pages

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    The talk of convergence between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) has been ongoing since 2002. Since 2002 there have been objections by accounting professionals opposing the convergence. At this point, the naysayers seem to be victorious. The total adoption of IFRS by the United States has been shelved for the time being, but here is still a responsibility for US CPAs to keep abreast with IFRS updates. This is “based on a proposed timetable the U.S. Securities & Exchange Commission (SEC) developed, acceptance of IFRS in the U.S. could come as early as 2015, so understanding the standards is critically important to management accountants, auditors, financial analysts, corporate executives, and others involved with financial reporting.” (Smith, 2012)…

    • 693 Words
    • 3 Pages
    Good Essays
    Read More
  • Best Essays

    Norwalk Pharmaceutical Division
    • 2244 Words
    • 9 Pages

    Norwalk Pharmaceutical Division

    Social and professional expectations have been undergone a major shift as the global moves to adopt International Financial Reporting Standards (IFRS) which is a set of accounting standards, developed by the International Accounting Standards Board(IASB) as the global standard for the preparation of public company financial statements. To date, industry focus has been mainly on the technical aspects of IFRS adoption; however, IFRS also is likely to impact the ethical aspect of accountants’ professional judgment, because IFRS requires the use of a more “principled” approach to accounting standards than previously required a rules-based system General Accepted Accounting Practices (GAAP).…

    • 2244 Words
    • 9 Pages
    Best Essays
    Read More
  • Powerful Essays

    ACC Standards
    • 1442 Words
    • 5 Pages

    ACC Standards

    References: Barth, M. (2006). Research, Standard Setting, and Global Financial Reporting. Foundations and Trends in Accounting, 1(2), 71-165. Retrieved from EconLit with Full Text database.…

    • 1442 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    The Relationship Between Fasb and Iasb
    • 1475 Words
    • 6 Pages

    The Relationship Between Fasb and Iasb

    The International Accounting Standards Board (IASB) was created after the Financial Accounting Standards Board (FASB) to establish a single set of accounting procedures and standards for both boards. The process has not always been an easy one, but the goal of merging the accounting standards globally overrides the disagreements. Overcoming impediments, such as language, culture, economic and political environments has made the process problematical. The IASB and FASB continue to labor on the short term goals agreed upon at the Norwalk Summit, held in Norwalk, Connecticut, on September 18, 2002 [ (Business Wire, 2002) ].…

    • 1475 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    influences that impacted the development of the conceptual framework
    • 374 Words
    • 2 Pages

    influences that impacted the development of the conceptual framework

    In the United States they have their own conceptual framework; they have not adopted either IFRSs or the IASB Framework. Both the IASB and the US Conceptual Frameworks are considered to have shortcomings. As a result, the IASB and FASB are jointly developing a revised conceptual framework. A revised conceptual framework is also necessary because of the joint efforts of the IASB and FASB to converge their accounting standards, with uniform accounting standards there is also a need to have a uniform conceptual framework.…

    • 374 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Uniform Accounting Standards
    • 796 Words
    • 4 Pages

    Uniform Accounting Standards

    In the last decade, various countries around the globe have shifted towards a uniform accounting standards or the International Financial Reporting Standards (IFRS). The main motive behind this movement is to come up with a global language for accounting which will be comparable and understandable beyond the borders of a nation. As of today about 120 countries require IFRS for domestically listed companies, although only about 90 countries have fully conformed to IFRS . While some argue that it is necessary to have a system of accounting that is clear and transparent to global investors and companies, some others are skeptic about it being efficient. Furthermore, some feel that the costs of implementing IFRS can be too high and hence uniform…

    • 796 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    Uniform Accounting Standards
    • 1544 Words
    • 7 Pages

    Uniform Accounting Standards

    Ray Ball. (2006). International Financial Reporting Standards (IFRS): pros and cons for investors. . 1 (1), 12-25.…

    • 1544 Words
    • 7 Pages
    Powerful Essays
    Read More

Related Topics