South Africa and IFRS
South Africa and IFRS
Jesse J. Case
Assignment 2
November 7, 2014
Jones Kasonso
Over the past decade there has been an increased push for the International Financial Reporting Standards (IFRS) in many countries around the world. Most countries are pushing for General Acceptance Accounting Practice (GAAP) that will be accepted internationally. At the present time over 130 countries and growing worldwide have adopted IFRS. Of that number include many countries in Africa. However, it is quite astonishing that Africa as whole had contemplated adopting IFRS given the muddled nature of these standards on the international grounds and the often unseen justification given for the adoption of IFRS particularly in Africa. South Africa became the first country in 2007 to adopt the Exposure Draft of the IFRS as a Statement of Generally Accepted Accounting Practice (GAAP). The intention of the early adoption of the standard at that time was to provide immediate relief for limited interest entities under the then pending Corporate Laws Amendment Act. The qualities of IFRS often included, improved consistency of financial statements amongst companies and countries, subsequent in a decrease in the equity cost of capital, improved transparency, and a decline in material processing cost and a decrease in risk of international investment decisions amongst others. Although these advantages look very desirable, it is also the case that these advantages cannot be reached in every economy. To be clear, IFRSs was designed for developed and seasoned capital markets. At least the economics speaks for itself. It is an irrefutable fact that financial statements assisted investors in making critical investment choices. At the time it was considered, Africa was in a developmental stage, IFRS would not have a solution at all, but rather have a real threat. A past report by the South African Institute of Chartered Accountants claimed that the IMF and UN had
Jesse J. Case
Assignment 2
November 7, 2014
Jones Kasonso
Over the past decade there has been an increased push for the International Financial Reporting Standards (IFRS) in many countries around the world. Most countries are pushing for General Acceptance Accounting Practice (GAAP) that will be accepted internationally. At the present time over 130 countries and growing worldwide have adopted IFRS. Of that number include many countries in Africa. However, it is quite astonishing that Africa as whole had contemplated adopting IFRS given the muddled nature of these standards on the international grounds and the often unseen justification given for the adoption of IFRS particularly in Africa. South Africa became the first country in 2007 to adopt the Exposure Draft of the IFRS as a Statement of Generally Accepted Accounting Practice (GAAP). The intention of the early adoption of the standard at that time was to provide immediate relief for limited interest entities under the then pending Corporate Laws Amendment Act. The qualities of IFRS often included, improved consistency of financial statements amongst companies and countries, subsequent in a decrease in the equity cost of capital, improved transparency, and a decline in material processing cost and a decrease in risk of international investment decisions amongst others. Although these advantages look very desirable, it is also the case that these advantages cannot be reached in every economy. To be clear, IFRSs was designed for developed and seasoned capital markets. At least the economics speaks for itself. It is an irrefutable fact that financial statements assisted investors in making critical investment choices. At the time it was considered, Africa was in a developmental stage, IFRS would not have a solution at all, but rather have a real threat. A past report by the South African Institute of Chartered Accountants claimed that the IMF and UN had
Bibliography: IFS Application Around the World Jurisdicitonal Profile: South Africa. (2013, June 5). Retrieved from IFRS: http://www.ifrs.org/Use-around-the-world/Documents/Jurisdiction-profiles/South-Africa-IFRS-Profile.pdf Bhattacharjee, S. (2009). Problems of Adoptoins and Application of Internal FInancial Reporting Standards. International Journal of Business and Management, Vol. 4, N.12. Bruce, R. (2011, January 2011). Africa emraces IFRSs. Retrieved from IFRS: http://www.ifrs.org/news/features/Pages/africa-embraces-ifrss.aspx