Question

Perform a search for related information about International Financial Reporting Standards {IFRS}

      What are your thoughts regarding the Reporting Standards to be instituted (e.g. is it necessary? Is it a good idea? Etc.)

Answer 1

Implementing IFRS will be a good idea for the modern economy and the entire business world. Majority of the investors are diversifying their investments around the world without any geographical limits.Companies undertaking international operations and opens subsidiaries in multiple countries. This trend is expected to grow in the future beyond calculations. In the past, this kind of cross border business operations were complicated by different countries who maintains their own sets of national accounting standards. This is a huge drawback of accounting and often added cost, complexity and ultimately makes it difficult for companies preparing financial statements and investors and users of  financial statements who makes business decisions. Due to the difference in accounting standards between different countries, companies having branches in more than one country is treating same kind of transactions in different methods in different countries, which leads to complexity in financial statements. Even a small difference in standards will lead to have a major impact on company's reported financial position and performance.

IFRS Standards addresses these drawbacks by establishing internationally acceptable set of accounting standards that brings uniformity, accountability and efficiency to financial statements of companies around the world.

IFRS Standards are transparent which enhances international comparability and quality of financial information, enabling investors and other market participants to make informed business decisions to plan their diversified investment. These Standards strengthen the accountability and efficiency of financial statements by reducing the information gap between the diferent countries and the providers of capital and the people to whom they have entrusted their money. As a source of globally comparable information, IFRS Standards are also of vital importance to regulators and business associates around the world. IFRS Standards contribute to economic efficiency and stability by helping investors to identify opportunities and risks across the world, thus improving capital allocation. The use of a single, trusted accounting standards reduces the cost of capital and international reporting costs.

At the same time implementing IFRS is a bit costly because companies will generally need to change some their systems and practices. But international organisations like G20 and other major business associations, professional accounting bodies and governments have given a huge support to the implementation of IFRS as  a global accounting standards. Researches and studies have found that adoption of IFRS has brought net benefits to the capital market.