Preview

South Africa and IFRS

Good Essays
Open Document
Open Document
765 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
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



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

You May Also Find These Documents Helpful

  • Powerful Essays

    International Accounting Standards Board (IASB), which was created in 200l. Previously, the International Accounting Standards Committee (IASC), founded in 1973, issued International…

    • 1751 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    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
  • Best Essays

    U.S. GAAP vs IFRS

    • 3430 Words
    • 14 Pages

    The United States is coarsely going through a big dilemma. It is deciding whether to adopt International Financial Reporting Standards (IFRS), or to stay with the current U.S Generally Accepted Accounting Principles (GAAP). Since this is such a serious decision, now would be an opportune time to take a look at what the advantages and disadvantages would be of switching to the new way of financial reporting, and doing so, shows the beliefs of the costs being too high to adopt a new set of reporting standards. People who support switching from GAAP to IFRS argue that IFRS will offer a general reporting language and consistent financial reporting for companies with global operations to make financial reporting more meaningful across borders. And. Supporters also believe that one common reporting system will cut costs for companies and make it easier for investors to compare the financial statements of companies from different countries (Diamond and Herrmann, August 2008). From the problem that the switch to IFRS would be exceedingly costly, to the fact that IFRS leaves more room for interpretation and lacks bright line rules, I will discuss all the reasons why switching to IFRS soon would not be the right decision for the U.S.…

    • 3430 Words
    • 14 Pages
    Best Essays
  • Powerful Essays

    References: Financial Accounting Standards Board (FASB). 2002a. Proposal: Principles-Based Approach to US Standard Setting. File Reference No. 1125-001. Norwalk, CT: FASB. Retrieved from http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176154526495 Hail, L., Leuz, C., and Wysocki, Peter D., Global Accounting Convergence and the Potential Adoption of IFRS by the United States: An Analysis of Economic and Policy Factors (February 25, 2009). Retrieved from http://www2.lse.ac.uk/accounting/news/MAFG/Leuzpaper.pdf Hinson, Y. (2009) Differences Between IFRS and GAAP Could Create Challenges for Educators. Retrieve from http://www.corporatecomplianceinsights.com/2009/differences-ifrs-gaap-challenges-educators/ Schroeder, R.G., Clark, M. W., & Cathey, J. M., (2005). Financial Accounting Theory and Analysis. 8th edition. John Wiley & Sons, Inc. Whittington, G. (2008). Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View. Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6281.2008.00255.x/full…

    • 1448 Words
    • 42 Pages
    Powerful Essays
  • Best Essays

    References: 1. Mir, M. Z., and Rahaman, A. S. 2005. The adoption of international accounting standards in…

    • 4209 Words
    • 20 Pages
    Best Essays
  • Best Essays

    With the introduction of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), the world is one step closer to achieving a global set of accounting standards comprehensible by different users of financial statement worldwide. The benefits of using these standards are numerous and proven by European companies that are mandated to adopt IFRSs in their financial reporting. These companies have been using IFRSs since 2005 and during these years they have seen and experienced firsthand the benefits promised. According to Cairn (2007), a survey conducted amongst European Union (EU) companies showed that companies and investors are of the opinion that it is the right decision by the EU to mandate IFRSs. Furthermore, it was found that consolidated financial statements’ qualities have improved through the adoption of IFRSs. Other benefits of having a global set of accounting standards could be the introduction of new capital market for companies that seeks international funding or investments. Investors could also make comparisons of financial performances between different companies across the world giving them more investment options. Also, corporate governance could be enhanced as financial reports follow a global set of standards. This is because more eyes are looking into financial reports resulting in more monitors in corporate reporting. In short, more investment opportunities and better corporate governance could be achieved across the world through the use of common financial language and this is the goal of the International Accounting Standards Board (IASB). With all the benefits from adopting IFRS, one would think that all countries would jump to its implementation. However, this is not the case.…

    • 3863 Words
    • 16 Pages
    Best Essays
  • Powerful Essays

    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 boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external.…

    • 1788 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    international standards

    • 1610 Words
    • 7 Pages

    ”International Accounting Standards.” Encyclopedia of Business and Finance. Ed. Allison McClintic Marion. Gale Cengage, 2001. eNotes.com. 2006. 17 Nov, 2010…

    • 1610 Words
    • 7 Pages
    Powerful Essays
  • Best Essays

    Ifrs

    • 3339 Words
    • 14 Pages

    (IFRS). This paper will provide a history of IFRS and discuss the timeline of convergence, along…

    • 3339 Words
    • 14 Pages
    Best Essays
  • Better Essays

    International Accounting Standards is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements (Investopedia, n.d.). IFRS are issued by the International Accounting Standards Board. The International Accounting Standards or the International Financial Reporting Standards are standards and guidelines used by nearly 100 countries. Many of the standards forming part of the IFRS are know by the older name IAS. Many countries use these standards and many do not. The International Accounting Standards Board is a committee that is trying to develop global accounting standards. The IASB has developed procedures that brings transparency, predictability, and consistency of this committee is to create global standards that are transparent, enforceable, understandable, and of high quality. These standards would be a very important step in the accounting world. The use of these standards would provide more informative financial reports with greater clarity and consistency and easily understandable with high quality.…

    • 1186 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    The adoption of IFRS around the world is occurring rapidly to bring about accounting quality improvement through a uniform set of standards for financial reporting. However, accounting quality is a function of the firm’s overall institutional setting, including the legal and political system of the country in which the firm resides. This paper documents the prospects of IFRS adoption and their impact on the financial reporting environment of Bangladesh considering the underlying institutional and economic factors. It argues about trade-off between the scale advantage of IFRSs (designed globally by the highly sophisticated authority) and the local advantage of decentralized adaptation. It is also an effort to focus on the problems relating to adoption of IFRS in Bangladesh and to reach some concluding remarks for better applicability of accounting standards in ensuring transparent information environment.…

    • 7842 Words
    • 32 Pages
    Powerful Essays
  • Satisfactory Essays

    The accounting field has standards in place that are used to report financial information of companies so that one can get a clear understanding of the company’s financial standing. However, standards can vary from country to country making it difficult to compare financial reports of companies in similar fields. This is a challenge the accounting profession has been dealing with for many years. Until there is uniformity one will not be able to really compare companies financial statements accurately. Currently the IASB and FASB are collaborating to develop international standards known as the International Financial Reporting Standards, IFRS. However this means there are still two sets of standards accountants much know in depth.…

    • 254 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Adejuwon, J. (2013) The Relevance of international Financial Reporting Standards to the Nigeria Economy, (1st Edition), J.A. Adejuwon & Co, Nigeria…

    • 1743 Words
    • 8 Pages
    Best Essays
  • Best Essays

    This research paper delivers an analysis of determining whether the International Financial Reporting Standards, hereafter known as IFRS, is a better reporting standard than the US Generally Accepted Accounting Principle (GAAP). Financial Statements have to provide high quality financial reporting information with regards to economic entities, primarily financial in nature, which are useful for economic decision making (FASB, 1999; IASB, 2008). International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have been extremely involved in making IFRS the international Accounting Standard. The Securities and Exchange Commission (SEC) has been working on evaluating the implications of incorporating IFRS into the US financial reporting system, currently known as US GAAP. More than one hundred countries have moved to IFRS reporting, or have decided to require the use of these standards in the near future. (SEC,[2007]). Financial reports are a combination of four different key statements. They are balance sheets, income statements, cash flow statements and the statements of shareholders equity. Currently, the FASB is the highest authority in establishing generally accepted accounting for public and private companies in the United States. Financial reports are a necessary tool used by current and prospective investors to see how a company function and stands financially. It is also used to analyze and assess a company’s potential areas of growth as well as its areas of weakness.…

    • 4364 Words
    • 18 Pages
    Best Essays
  • Good Essays

    It was not so long ago that the mention of International Financial Reporting Standards (IFRS) immediately conjured up thoughts of convergence with United States Generally Accepted Accounting Principles (US GAAP), which then evolved into the four major projects that is financial instruments, insurance, leases and revenue. But today, the key words are ‘comparability’ and ‘consistency’. Comparability of information prepared under USGAAP and IFRS, instead of convergence of the two frameworks, and consistency of application and consistency of enforcement of IFRS around the world. In today’s marketplace IFRS has a discrete advantage over USGAAP. The fact is that IFRS is either permitted on required in over 120 jurisdictions while US GAAP is required in one.…

    • 863 Words
    • 4 Pages
    Good Essays