Question

why it is challenge to build IFRS expertise? explain in detail not less than 500 words. include reference

Answer 1

IFRS is formulated by International Accounting Standards Board with the objective of bringing in uniform accounting language throughout the globe.   IASB is now exercising one and similar accounting standard, that is IFRS, for the globe that will replace country’s GAAP (Generally Accepted Accounting Principle).

Challenges in building IFRS expertise:

1. Differences in existing GAAP and IFRS: Entire set of financial statements, the methods of accounting have to undergo drastic change in order to comply with IFRS. This requires a deep understanding of IFRS and effects of this transformation.

2. Effects on Taxation laws: In many countries adoption of IFRS will impact the current taxation policies. Tax liabilities would also undergo drastic change. Thus tax laws should also be relooked at.

3. Legal consideration : IFRS does not recognize overriding laws. In some countries regulatory and legal requirements will pose a challenge unless the same is been addressed by respective regulatory.

4. Fair value measurement : IFRS uses fair value as a measurement base for valuing most of the items of financial statements. The use of fair value accounting can bring prejudice to the financial statements. It also involves a lot of hard work in arriving at the fair value and valuation experts have to be used.

Reference : IFRS Standards and Interpretations