Benefits and Determents of Moving to the IFRS

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 fromany error or complexity.the comparable aspect in it was that it was   used equally in all the other enterprises,financialstatements most of the time clearly  identifies  every information, in other word, they give the events preceding the transactions  into a broad classes depending on the economic  characteristics,

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 alwayspresented  for  a period  above the  one  financialyear, a more  narrowed down  statements  should give the items as the wayit corresponds inthe  in the section of the organizationactivities, 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 .

Internationalfinancial 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 financialinformation,this international  standard  is helpful in large organization’s  because it simplifiesthe 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 financialissues, the main reasonfor 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 andsupply of the business goods and services.

The diversity of IFSR in the United Stateshelps create a cohesive international partnership and also in creating an entrylink to the foreign market.At long last, it wins the confidence of the investors, theinformationprovided in the booksof 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  equiptheir 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, moresignificantly,whendealing with foreign financial information, theIFRS formsbasis of the tax profits hence thecompany will identify the rates they remit to the country, this records helps keep track the record of the business, thetax cash flow and payment of dividendsalso determined, thus special attention must be taken into consideration so as to avoid consequences of having an outdated system of financial management,. Inthe UnitedState of America, much emphasis is on large companies to switch on to current IFRS  for easy finances representation and effectivestructured 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 roleof 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 visiblefinancial 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 accountingmaterials 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 havea precise financialinformation 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 choiceentirely needs a proper dissemination of informationthat benefits the executive in policy making,(Tarca 2005).This strategy further helps the  investors  in the riskassessment 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, theadoption 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 ofIFRSrepresents a big portion in the United States has publiclyfueled to its outrageous benefits even at the communitybased level organization.

Most countries in the worldhave 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 harmonizationexpresses a globalboosts of  reflection on international economicbusinessenterprise, 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 buildsthejob 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.

Download full paper on benefits and determents of moving to IFRS or order a plagiarism free paper at an affordable price. 


ORDER UNIQUE ANSWER NOW

Add a Comment