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.
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 AstraZeneca, which possess businesses all over the world. What accounting standards should the corporations beyond the UK adopt? Do they use the standards of other countries where business operation is located or employee the British standards. It is difficult to make this decision. If using British standards, the performance of business presented by the financial statement is not easy to estimate, because different standards cause difficulties to be understood by international markets. Such a situation could probably result in money-costing and time consuming. Therefore, some countries have adopted actively the international financial standards to solve this problem.
Over 100 countries worldwide use international accounting standards on either a compulsory or on a permitted basis and more countries are expected to follow in the near future (Gannon and Ashwal, 2004). IFRS have been accepted or recommended on a variety of industries of many countries. To comply with EU legislation, all the EU companies have been required to present financial accounts for accounting period from 1 January 2005 in accordance with IFRS. This essay will measure the impact of the adoption of IFRS in the UK. Specifically, it examines why the UK implement IFRSs and then the British businesses are upset with the IFRSs and object about the fair value concept. Why serious misgivings of many Australian businesses about the IFRSs will be analysed as well.
The reasons that the UK have adopted IFRSs
What are IFRSs?
International Financial Reporting Standards (IFRSs) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS was issued between 1973 and 2001 by the board of the International Accounting Standards Committee (IASC). In April 2001 the IASB adopted all IAS and continued their development, calling the new standards IFRS...