Implementation International Financial Reporting

This essay takes a look on the issues raised regarding the implementation of the International Financial Reporting Standards. It discusses the benefits associated with the adoption of such standards as well as its implications on companies in different countries.

Introduction

International consistency in accounting and auditing standards has become the demand of the global financial markets. With this, several countries have started adopting the International Financial Reporting Standards while others base their local standards on the IFRS. In Europe, public enterprises have already been required to prepare financial statements under the IFRS. On the other hand, reconciliation on the U.S General Accepted Accounting Principles (GAAP) is already being facilitated.

The trend towards these international standards is evidently growing and is expected to result in greater comparability and disclosure of information. The transition though encompasses not just the changing of accounting procedures. Companies will have to undergo extensive change and risk management to facilitate adoption. Also there remains to be issues concerning the complexities of the IFRS requirements in terms of measurement and accounting as well as the amount of information to be disclosed. Such areas of concern are yet to be fully resolved as continuous efforts are being made to improve the conflicts and contradictions.

Ultimately, the IFRS will be beneficial only after a consensus is achieved on how to apply such standards. Also, there are arguments that the IFRS is specifically suited to developed economies. As such, its implementation may be inappropriate to developing countries. Unless these critical issues are resolved, the objectives of the IFRS towards a single accounting standard may be far from reach. The transition and conversion to IFRS entails tremendous amount of changes to be undertaken. The adoption must eventually be able to bridge the gap between the IFRS and companies’...