However, the main tension in the model rests due to the non- uniform nature of firms as well as nations. For instance, countries differ on myriad ways such as capital and labor markets, nature of government, involvement of government in the company and so forth. Similarly, firms differ from each other in various ways including size, growth, types of products, geographical location and technological advancement . Therefore, coming up with a detailed accounting system or a set of principles to fit all of these can be challenging. Thus, IFRS uses a principle based system, rather than a rule based system which will allow the companies to apply IFRS according to their situation and prepare their statements. However, this flexibility can itself be seen as a big down- side of this system. This will provide a way for companies to manipulate the statements which in turn can encourage …show more content…
Hence, for a small company the cost of shifting from its current accounting practice to IFRS might be too high whereas for a big company it might be small. Furthermore, the time in which all the companies will have to shift from their old system to IFRS can decrease the quality of the financial statements. Lack of experience in this new system of accounting can also increase mistakes making the system less accurate