Question

In the above news report, Joseph Bryson, Director of Quality and Development at the International Federation of Accountants is quoted as explaining the benefits of adopting international accounting education standards. Analyse Joseph Bryson’s arguments from the perspective of classical political economy theory, explicitly considering how he subscribes to a capitalist ideology and the role of accounting education in sustaining this ideology. (Maximum word limit: 500 words)

Answer 1

Benefits: Improved Flow of Capital

International Financial Reporting Standards, or IFRS, facilitates the convergence and transparency of accounting practices. This boosts the flow of capital across the international markets. Investors and other stakeholders find it more convenient to compare their business performance with other international companies. This makes it easier and cheaper for them to raise business capital from investors across the globe.

Globalized Orientation

Using IFRS frees a business from the restrictive scope of national-level accounting standards. Financial reports become automatically acceptable in IFRS-compliant countries, and companies don't need to prepare alternative sets of financial statements when pursuing business interests in these countries. This reduces a business's costs of preparing financial statements destined for international audiences.

Generalized Standard-Setting

IFRS stipulations are flexible to both expected and unexpected changes in the global business environment because they are based on broad principles. The generalized stipulations are designed to be applicable and accommodative to varying jurisdictional circumstances and traditions, with minimal interventions of the IASB. For example, the IASB does not recommend any specific formats for preparing financial statements. This gives a business the discretion of choosing the presentation format that best suits it and users of its financial reports.

Enhanced Financial Reporting

The use of IFRS enhances the quality of financial reports because it leaves little room for undermining the objectives of the set standards. This is unlike country-specific accounting rules that are susceptible to circumventions. Quality financial reports boost investor confidence .