Question

“Adoption of the IFRS in many countries has various advantages. It will lead to economic stability in different countries due to the increased foreign investment and division of labour. There will be decreased transaction costs such as training, accountancy and audit fees for the foreign investors. IFRS greatly reduces earnings manipulation as it increases the transparency of the financial statements. There are mandatory disclosures in the off-balance sheet items that make it hard for the company accountants to manipulate the profit and asset figures. It also decreases the costs of equity. The investors are able to understand the accounting data of investments clearer reducing the perceived risks of the project. They are more willing to accept lower returns.

Finally, the IFRS encourages fair value accounting which shows the investors the market prices of the company’s assets and liabilities. It acts as a signal in times of economic boom and depression. It also encourages and ensures corporate governance in the company which leads to healthy companies.”

Share your thoughts on this commentary. Do you agree or disagree with their assessment? Why?(200 words)

Answer 1

I completely agree with the given comments for the implelementation of IFRS (International Financial Reporting Standards).

This is the world of Globalisation where most of the countries are well connected with each other and are also dependent on each other for their trade.In this situation, many countries accept the deposits of other countries also. Many citizens of one country work for the other countries also. This all demands for a unitary Financial repoarting system so that each and every person may understand the Financial statements and other financial tools for all countries which follow IFRS.

IFRS is a good resolution for the process of Globalisation which leads to decrease the training fees, Auditing fees of the compnay which deal with more than one countries which ultimlately give a benefit not only to Shareholders but also to Stakeholders.

The implementation of IFRS by many countries will give a perfect benefits in many ways to the economy of the countries. Investors are always ready to invest the places where they have a complete knowledge about the condition of the financial health of the sector where they want to invest. So, when the investors have all kind of information in terms of fiancial reporting of the companies, they will dare to invest in the sector without any hesitation which will ultimately give benefit to the country's economy in terms of Foreign Investment.

International Financial Reporting standards provide a standard to the financial reporting which is also helpful to bring a transparency in Financial Statements which decrease the possibility of the fraud and also increase the believe of the investors on the financial statements.

With the help of the above discussion we can easily say the IFRS don't have a single advantage while they have multiple advantages for the countries which follow these standards.