Question

identify three countries from this group that are likely to have different reasons for not permitting the use of IFRS by domestic listed companies. describe those reasons

Answer 1

Countries that are still using GAAP Not IFRS :

1. Algeria

2. Argentina

3. Brazil

Why they are using IFRS?

1. The first and the foremost reason is IFRS is a costly affair : Switching from GAAP to IFRS will prove to be very expensive for the country. Workforce training, user training and system changes are some of the unavoidable expenses involved in the process.
2. Comparability of financial statements is another important point . With the IFRS, the comparability between financial statements may not be achieved. People living in countries, applying IFRS, come from varying backgrounds. This results in interpretative differences arising out of varying historical practices. This breaks down the common ground of comparison of financial statement and serves as a big hurdle in the process.
3. lack of superior standards. IFRS financial statements are not at par with the quality of GAAP financial statements. Efforts are being made to make IFRS equivalent to GAAP. Till this happens, the country would like to stick to GAAP.
4. IFRS is that IFRS is principles based whereas GAAP is rules based: With the implementation of IFRS, there will be more scope for interpretation with regards to financial statements. This is not something that the U.S looks forward to.