Question

Read “New IASB Leader Embraces Challenges” which can be accessed through the DeVry online library. Choose a country that has already adopted IFRS. In 2-3 pages (12-pt type, double-spaced) answer the following questions:

1. Describe the process that your selected country went through to adopt IFRS, such as

how long it took for the country to fully adopt IFRS.

2. Did the country adopt IFRS or did they make changes to IFRS to adapt to their country’s culture or regulations?

3. Has IFRS adoption made it easier for companies in that country to access the capital markets?

4. Based on your research regarding your selected country, should the US SEC mandate

adoption of IFRS? Why or why not?

5. What is your personal opinion regarding whether the US SEC should mandate the

adoption of IFRS?

Answer 1

Describe the process that your selected country went through to adopt IFRS, such as

how long it took for the country to fully adopt IFRS

For many sectors the transition to IFRS was smooth. Adopting IFRSs across all sectors has enabled users and preparers to move between sectors, and between countries, with all such viability of transferring knowledge and skills. If we review on international grounds, it helps many firms and industries to use the cost saving techniques. Small and medium-sized entities and NFP entities have concerns regarding the costs of fully complying with the new standards, especially as regards disclosure requirements.

Handling the IFRS entry

By 2002, the main differences between IFRSs and AGAAP were areas in which:

• IFRSs were more comprehensive and wider and financial instruments recognition & measurement and post-employment benefits; and

• AGAAP was more comprehensive, including: insurance, extractive activities, intangible assets, and analytical procedure

EASG firs is compared with AASB to review that how it is going to affect the Australian economy in a better way.

• To provide constituents time to become familiar with IFRSs and develop information systems, due process completed by July 2004

• Most of the entities are given almost two years to implement IFRSs – first annual balance date for which IFRSs were generally applicable was 30 June 2006

Disclosing the Impacts of Adopting Australian Equivalents to IFRSs in April 2004

AASB 1047 required entities to disclose the relevant impacts in their financial reports for the year preceding the year of adoption – typically the year ended 30 June 2005

Retained key features of Australian insurance and extractive activities standards, since IFRS 4 Insurance Contracts and IFRS 6 Exploration for and Evaluation of Mineral Resources grandfather existing relevant national GAAP meeting particular criteria

The process did take enough time to imply comprehensively as it started its direction since 2002 to adopt IFRS from jan 2005

2. Did the country adopt IFRS or did they make changes to IFRS to adapt to their country’s culture or regulations?

As we have chosen Australia as our country for IFRS analysis so we can go through below arrangements. Earlier it was only following AASB

AASB was covering reporting for all entities including non profit , such as listed companies, for government , charities etc. it was a mandatory portion.

Financial Reporting Council (FRC) oversees AASB as both are Australian government agencies.

AASB is to participate in and contribute to the development of a single set of accounting standards for world- wide us

FRC can give broad strategic direction to the AASB

Pros to adopt IFRS-

• It helps to attract capital to Australia at lower

cost of capital

When lower cost is attracted then automatically there is a lower costs for preparers, auditors and users of multinational entities’ financial reports (no need to re-cast)

It also helps in filling some gaps in Australian GAAP

such as financial instruments, capital market.

Has IFRS adoption made it easier for companies in that country to access the capital markets?

Adopting IFRS by Australian companies will lead to the positive outcome for

1,Investors in the market

2. Providing analytical market based information

3. Forecast Analysis

4. Considering the IFRS and the research has made a view that Australian economy is benefited from the same.

5. Positive results in terms of the promotion of the comparability of Australian entities’ financial reporting practices with their global peers.

Based on your research regarding your selected country, should the US SEC mandate

adoption of IFRS? Why or why not?

As we know IFRS has been more implied by more than 120 countries, so if we look at our research note for Australia then the benefits derived by it from IFRS is huge and the same can be counted on above.

Looking at the other countries say for example India, Mexico, Canada they are switching to IFRS. So if we talk about making it mandate for US SEC we have to analyse and find out the way to derive the profits from the adaptation.

Say for example we can make it mandate for the businesses which are performing in the international market and so are following the IFRS on the other side of the trade. This way we can see how can use the IFRS in a standardised way when it is implied to all the section of the business in each country. Also IFRS does affect the economy so when a larger international business is going to adopt such changes we will analyse it further and check how we are going t make difference from following the previous regulations and standards

Based on your research regarding your selected country, should the US SEC mandate

adoption of IFRS? Why or why not?

As we know IFRS has been more implied by more than 120 countries, so if we look at our research note for Australia then the benefits derived by it from IFRS is huge and the same can be counted on above.

Looking at the other countries say for example India, Mexico, Canada they are switching to IFRS. So if we talk about making it mandate for US SEC we have to analyse and find out the way to derive the profits from the adaptation.

Say for example we can make it mandate for the businesses which are performing in the international market and so are following the IFRS on the other side of the trade. This way we can see how can use the IFRS in a standardised way when it is implied to all the section of the business in each country. Also IFRS does affect the economy so when a larger international business is going to adopt such changes we will analyse it further and check how we are going t make difference from following the previous regulations and standards

What is your personal opinion regarding whether the US SEC should mandate the adoption of IFRS?

My personal opinion in adopting IFRS by US sec is that US GAAP are standardised set of policies that never let any accounting system let down . Along with it US is a strong Economy and working primarily in making there task in a better understandings and so personally I dont feel the need to follow IFRS by US SEC.