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The Benefits of Adopting International Financial Reporting Standards (IFRS)

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The Benefits of Adopting International Financial Reporting Standards (IFRS)
The Benefits of Adopting International Financial Reporting Standards (IFRS)
In The United States by Michelle Minor
Accounting 203
5/20/09

Most people believe that the conversion from each country’s GAAP to IFRS is inevitable, though there is nothing conclusive of how effective or successful this would be. In short, making the switch to IFRS is a great leap of faith by all who participate. Ideally IFRS is designed to be used by all companies worldwide, which is highly unlikely unless they are made mandatory. Obviously not all countries can (or will) apply and enforce the rules equally. There is also no hard evidence for the success or failure of international accounting rules. What IFRS proposes to do for the world is, to say the least, a monumental task. The things that interest me the most are how the IFRS and the IASB came to be, what IFRS has to offer investors and also what they have to offer different types of companies around the world. While I have my concerns about the specifics of the system and its rules, overall the potential benefits of a mandatory, uniform set of accounting standards are undeniable.
In order to best understand IFRS it is important to know where they come from and what they are all about. For decades, more specifically from 1973 until April of 2001, the International Accounting Standards were developed and implemented by the International Accounting Standards Committee (IASC). These rules were previously given the title of IAS which stands, reasonably enough, for International Accounting Standards. While this system worked fairly well, it was replaced fairly recently (April of 2001) by the International Financial Reporting Standards (IFRS) which are set forth by the International Accounting Standards Board (IASB). As stated by Ray Ball, “the IASB is better-funded, better-staffed and more independent than its predecessor” (3). Regardless of the name of the standards and standards-setting body, the goal has remained


Cited: American Institute of Certified Public Accountants. AICPA IFRS Resources. 4 May 2009. . Ball, Ray. International Financial Reporting Standards (IFRS): Pros and Cons for Investors. 9 March 2009. 7 May 2009. . Campion, Stephanie. “IFRS or U.S. GAAP-Scenarios for the Future.” AICPA IFRS Resources. 20 April 2009. 6 May 2009. . KPMG. IFRS in the U.S.: Benefits and Challenges of the Coming Change. March 2008. 16 May 2009. .
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