World Moving toward Three Versions of IFRS: IASB IFRS, EU IFRS, and US IFRS

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Task 2:
Discuss the fear expressed by the chairman of SEC (USA) that there is a possibility of the world moving towards at least three versions of IFRS- namely IASB IFRS, EU IFRS and US IFRS. Introduction

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. In order to achieve its goal in creating an international set of accounting standards accepted by countries worldwide, the IASB must recognize that differences in business and cultural environments, and respecting national sovereignty are critical elements in achieving a truly global set of accounting standards (Saudagaran, 2006). This had been the main problem that plagued the IASB resulting in the criticisms and rejection of IFRS in certain countries. Many believe that the IFRS is dominated by the G4 countries and is based on US style accounting. Moreover, the IASB was also criticized for not taking other countries in regard when developing standards; only 8 countries are seated on the board with 5 being G4 countries (Alexander et. al., 2007). This led to the many challenges issues that the IASB has to face leading to the fear of the SEC chairman that there will be 3 different IFRS- namely IASB IFRS, EU IFRS and US IFRS. In this assignment, we take a closer look at these issues in different area which include political, cultural, legal, economic, and even religious issues. Political Issues

Ever since the IASC was formed and later succeeded by the IASB, political matters have always been an issue in the standard setting process. One main issue is on the countries members in the IASB. The IASB board has been dubbed as "G4 Plus 3" by dissatisfied parties, who believe the new board is dominated by members of the G4+1 Anglo-Saxon standard-setter's club, with token members from Europe and Japan (Irvine, 2001). This brings challenges to the IASB in gaining global acceptance of IFRS. An example is the negative reaction in Europe voicing concerns of a US style pronouncement, not truly representative of the world and the disregard of developing countries. The European Parliament has voiced its concern on its involvement in the development of the IFRS. They believe that the IASB should seek the European opinion before proceeding to approve standards to avoid any mishap (Insight, 2007)....
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