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