The IFRS Adoption
Over the decades ago, there has been challenge in the organization on managing the accounting standards. The existence of poor rules and regulations enabled most organizations to experience difficulties in their financial management, as a result of this problem, the relevance of the international financial reporting standard should made its content reliable and objective, that is the information that was to be provides was free from any error or complexity.the comparable aspect in it was that it was used equally in all the other enterprises,financial statements most of the time clearly identifies every information, in other word, they give the events preceding the transactions into broad classes depending on the economic characteristics.
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According to Adebiyi, (2006),the degree of accuracy of the stated figures must be disclosed in the sheet with the date time and place ,it is always presented for a period above the one financial year, a more narrowed down statements should give the items as the way it corresponds in the in the section of the organization activities, at some point, if the need be, the concerned accountant might further give the nature and the amount receivable or payable to another affiliate company .
International financial reporting standards therefore is a collection of accounting standards that was initiated to provide a global framework on, how to deal with the disclosure of financial statements .it helps in providing guidance and the preparation of financial information,this international standard is helpful in large organization’s because it simplifies the accounting activities,for instance most companies .in the United states emphasizes big organization to adopt the system because it has a significant in the decision making process and perhaps it promotes accountability and transparency, in matters of business, both internationally and domestic, the role accounting professionals are to get equipped with the skills on how to use the IFRS tool.
Determinants of Adopting International Financial Reporting Standards.
IFRS is one global platform that is to be used worldwide with regard to large corporations on matters concerning consolidated financial issues, the main reason for the unified adoption is that it help in the reduction of costs, here the cost that could be incurred in employing more staff and the retraining will be diverted in increasing the assets of the business thus increasing the market demand and supply of the business goods and services.
The diversity of IFSR in the United States helps create a cohesive international partnership and also in creating an entry link to the foreign market.At long last, it wins the confidence of the investors, the information provided in the books of accounts helps the sponsors to foresee the benefits in future if they would like to invest in the state projects.
In determining the mode IFRS, the manager should therefore equip their skills in making financial comparison and identify the overall financial information of the enterprise and the convergence with the global accounting standards, for instance ,when this is adopted by the major companies, there will be a drastic quality results in the financial reporting hence becomes a determining factor .
More over , other determinants of the IFRS is the increased competitiveness of the United States market especially in the capital market ,Here, most of the information provided by auditors must conform to the standards as designed , this culture helps promote the overall clarity of finance usages, this commonness therefore enhances the multinational companies accessing the stock exchange benefits and privileges,
Tax issue also determinant factor, more significantly,when dealing with foreign financial information, the IFRS forms basis of the tax profits hence the company will identify the rates they remit to the country, this records helps keep track the record of the business, the tax cash flow and payment of dividends also determined, thus special attention must be taken into consideration so as to avoid consequences of having an outdated system of financial management,. In the United State of America, much emphasis is on large companies to switch on to current IFRS for easy finances representation and effective structured finance statements.
Roles of International Financial Reporting Standards.
The IFRS system is of great significant because it helps reduce the biased accounting held by the managers who likely to have opportunistic mode of behaviors of misappropriating the public funds, the role of the system in this case is to promote the closer relationship between the stakeholders and the target beneficiaries,(Lewis and Pendrill1996), this environment enhances transparent wealth creation and satisfaction thus the system enhances a positive increase in the country’s` economy and individual earnings.
The political point of view is that large organizations should pay ore tax to the government,having more visible financial records will enable the company measures the rate ,to avoid political costs of overestimating the amount of tax, the system clearly rolls out the exact record resulting from the operations costs
In addition, to meet the international requirements,the IFRS regulations gives much emphasis on the a corporate leadership so the concern manager must minimize the irregular accounting materials for the organization, here the collective governance through the system clearly defines the general organizational set up thus the system enables proper accountability of finance thus improving best behavior practices of the concerned persons
The system also plays a prime role in ensuring that we have a precise financial information which on the other hand gives a good public image, for instance, the quality of financial information protects the relationships of the stakeholders by discouraging undisclosed information, the system improves the fair value technique because of the detailed information which is sensible in determining the profitability margin of the business with an inclusive in the market risk. This accounting choice entirely needs a proper dissemination of information that benefits the executive in policy making,(Tarca 2005).This strategy further helps the investors in the risk assessment of the company that is assumed .
The users of the system especially by large companies helps them to account for each resource used , more so the general information is easily understood because of its quality financial reporting, the adoption of the system in Europe has adversely improved the quality publication of the financial records, the improvement of financial reporting has led to firm foundation level that reaches the international level recognition, companies adopting the system have low chances of having loss hence u\it has led to an increase the profitability margin. The increasing acceptance of IFRS represents a big portion in the United States has publicly fueled to its outrageous benefits even at the community based level organization.
Most countries in the world have evolved in the accounting field because of the adoption of accounting system. The unification of the accounting helps in the elimination of the differences ,the harmonization expresses a global boosts of reflection on international economic business enterprise, it is because the entire continent is economically becoming a hub for business activities .the corporation among the member state make is easier for consolidation of both internal and external documentation soas to arrive at single point of reference. At long last, this togetherness encourages universal documentation provided thus builds thejob market for their services.(Chua and Taylor,2008).
Furthermore, the existences of financial statements of various countries in the market who have accepted virtually in the entire member state both the government or private utilities. This road map system outlines the value of financial information hence forming a basis of evaluation in the business enterprise, currently in the United State education training s carried out for large organization so as to realize the need of IFRS when dealing with overwhelming financial reporting.
In general, IFRS give a favorable value in accounting form and how it affects the items. The comprehensive adjustment of a particular item in the organizations recorded in the system thus the consolidated information aids the precise reference of the item.it also outline the income and the expenses and the liabilities incurred in the organization or business firm.
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