...What are the benefits of international financial reforting standards since thier adaption at the beginnng of the 21st? essay EXECUTIVE SUMMARY International Financial reporting Standards IFRS as a recent accounting phenomenon has drawn the attentions of Accountant, financial institutions and financial managers, multinational companies, government, financial regulatory institutions and in all the participants in capital market. This research is aim at examining the benefits of IFRS as against the present realities in the 21st century. In this work , review of literatures was carried out to ascertain the reasons for the adoption of IFRS, comparison were also made between existing US GAAP and IFRS using SWOT analysis in order to establish efficiency over other national GAAP. And from the report we can see that the usefulness of internationally recognized standard cannot be over emphasized as it cuts across all the spheres of the economy. Like the capital market, investors, globally etc. The research also established the improvement that IFRS upheld through its transparency, transactional cost reduction and reduction in complexity of financial statement. This is due to multiplicity of standards, although some weaknesses were encountered in the use of the standard. These include that the standard is principled based which makes it difficult to be compared with the other standards. We have also analysed the need for enforcement of the standard so that it will be same globally. There...
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...to test a student’s achievement of objectives 1 and 4. It is an individual assessment task. Weighting: 10% Task details: The process of adopting the IFRS in Australia has led to some significant changes to some accounting standards and minor changes in others. A number of countries throughout the world are now undergoing a similar process as they too adopt the IFRS regime. However, a single global set of accounting standards has not been achieved as the United States continues to apply its own Generally Accepted Accounting Principles (US-GAAP) as endorsed by the US Financial Accounting Standards Board (FASB). In 2003 the International Financial Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) commenced a joint project with the aim of converging the IFRSs and FASB standards. This project will result in further changes which will flow through to Australia, but when complete, may ultimately result in a true international standardisation of accounting and a single set of global financial accounting standards. This task requires you to consider the implications to Australian financial reporting if this international standardisation occurs. What benefits can Australia expect from all this international standardisation? Required: In an essay you are required to explain “the benefits Australia can expect from the international standardisation of financial reporting”. You must use scholarly research to develop the arguments you present in...
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...could also be subjective and easily manipulated. This contrasts with the criteria of Australia’s basis for group consolidation, namely, “effective control” which is determined by control over the entity's board and the proportion of potential and current voting rights. The observations call for the principle-based accounting system instead of the insufficient and easily manipulated rules-based system. In sum, the abovementioned suggests that the financial reporting standard-setting process is largely uncertain and that the accounting standards may often be incomplete. More importantly, comparisons are made between the IFRS and Australia’s modified versions of IFRS and the results highlighted that Australia’s modified standards may sometimes be of superior quality and are more contextually relevant for Australian financial report users than the IFRS. Hence, from the above considerations, it is recommended...
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...Determinants and Consequences of Heterogeneous IFRS Compliance Levels Following Mandatory IFRS Adoption: Evidence from a Developing Country The Philippines known as one of the developing countries in Southeast Asia has also become one of the countries supporting the shift and full compliance with the International Financial Reporting Standards (IFRS). The change from following the U.S GAAP or the localized version of the U.S GAAP to the International Financial Reporting Standards has become one of the main priorities in the accounting system of the country. However, there is a need to fully understand whether or not there really is an economical benefit in the full compliance of the IFRS. This is needed in order to ensure that the full compliance is the best decision for the country. The full compliance with the International Financial Reporting Standards have been said to provide many benefits for the members of the European Union focusing more on the developed countries who are globally competing and interacting with one another. However, it is difficult to fully grasp the effect and benefits of the full compliance or any levels of compliance with the IFRS in relation to developing or less developed countries because of the lack in data and the different perspectives followed between the IFRS and the local accounting system of a particular entity. The need to interpret the effects of the different levels of compliance with the IFRS is encouraged and greatly needed however...
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...Porter Gervais Professor Duron 10/21/13 IFRS Rough Draft Ch.20 IFRS vs. GAAP When accounting for pensions and post-retirement benefits, IFRS and GAAP have similarities as well as differences. There are two pension plans that are frequently used in accounting for pensions. These two plans are known as, defined contribution plan and defined benefit plan. Both GAAP and IFRS separate their pension plans, but their accounting for defined benefit plans differ. Another major difference occurs when recognizing actuarial gains and losses. Differences between IFRS and GAAP arise when distinguishing unrecognized past service cost. IFRS and GAAP also have their similarities. They both have similar views when it comes to their view of pensions and postretirement benefits. Both IFRS and GAAP also use the corridor approach when recognizing gains and losses. The defined contribution plan relies on an employer who contributes an amount on certain periods to a pension trust, while the defined benefit plan summarizes the benefits that employees will receive when they retire. There are similarities and differences concerning defined benefit plans. Both IFRS and GAAP recognize liabilities and costs for employee benefits during the period when the service is provided. It’s important to understand that GAAP refers to the defined benefit obligation as the (APBO), while IFRS states it as the (PVDBO). The differences start occurring when recognizing net funded status. Under...
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...contribution of IFRS to UK accounting standards Name Institutional Affiliation INTRODUCTION International Financial Reporting Standards (IFRS) are principles based on standards and the interpretations implemented by the Board of International Accounting Standards as the global financial reporting framework. IFRS are guidelines and definitions that require to be applied in the preparation of financial statements by the international companies. Before IFRS was referred to as International Accounting Standards (IAS), then in 2001 the board of the international accounting standards (IASB) took the control of setting the IAS. Then the IASB developed the standard known as IFRS. According to (Shim, Siegel, Shim & Shim, 2012), the designing of IFRS is done as a common language to be used by business affairs so that the accounts of the company are comparable and understandable across the international boundaries. They result from the rapidly growing trade and international shareholding, and they offer best solutions to the companies trading in several countries. Many different national accounting standards are progressively being replaced by the IFRS. They provide set rules to be followed by the accountants in the provision and maintenance of the accounts books which are reliable, comparable, relevant and understandable as per the users external and internal. IFRS was adopted in the UK in 2005, and all the public companies were required to use the IFRS policies for their...
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...Highlights of IFRS Research By CYNTHIA BOLT-LEE, CPA and L. MURPHY SMITH, CPA, DBA NOVEMBER 2009 Conversion from U.S. GAAP to IFRS is a heavily discussed topic in the corporate world. Expected benefits of adoption include reporting consistency, enhanced global competition and improved financial reporting transparency. While many countries worldwide have already adopted IFRS, many other countries are closely examining its effects before adoption, not only from an economic perspective but also from a reporting quality position. COMPARING RESULTS Researchers Elaine Henry, Stephen Lin and Ya-Wen Yang evaluated the difference between financial results under U.S. GAAP compared to IFRS. Their results show that convergence between U.S. GAAP and IFRS is occurring. Using 2004 to 2006 reconciliation disclosures, the authors found that the calculated difference between shareholders’ equity under U.S. GAAP and under IFRS declined from 2004 to 2006. In addition, the difference between U.S. GAAP and IFRS reported net income during this period also declined but remained significantly different. Pensions and goodwill appeared to be the dominant reconciliation items. Reconciliation amounts varied by industry and country, raising questions about consistency between region and industry. Additionally, more than 70% of the companies examined in 2004 through 2006 had a higher return on equity under IFRS compared to U.S. GAAP. The 2007 SEC elimination of the IFRS-to-U.S. GAAP reconciliation...
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...Running Head: DIFFERENCES BETWEEN GAAP AND IFRS 1 Differences Between GAAP and IFRS Accounting Practices Sharon Woodards Liberty University Intermediate Accounting II 302 Professor Ashley Harper November 7, 2014 DIFFERENCES BETWEEN GAAP AND IFRS 2 Both the IFRS ( International Financial Reporting Standards ) and the GAAP ( Generally Accepted Accounting Principles ) are a set of accounting rules that companies either can or must follow when preparing their financial statements. Set by policy boards, the United States enforces the use of GAAP as the set of rules of processes and standards that its companies must use for reporting and recording of their financial statements. At the same, other parts of the words use the IFRS as their set of rules for companies to follow. This IFRS set of rules were developed by the International Accounting Standards Board (IASB). Due to this, the world has been talking about combining the two standards into one globalized set of accounting standards that will comprise of both standards. The object of this would be to have the world recognize one set of globalized set of accounting practices. There are some differences that the US should be aware of before the convergence between the two ever takes place. Some of the major differences between GAAP and IFRS revolve around grants to employees, vesting, modifications, tax withholding, inventory differences, revenues and...
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...IFRS In a perfect, ideal world, financial statements would be consistent for market participants to easily understand, regardless of location. In reality, there are people that exist that have put that idea into real-life action. These people are known as the International Accounting Standards Board (IASB). IASB formed in 2001 with a commitment to develop “a single set of high quality global accounting standards that provide high quality, transparent and comparable information in general-purpose financial statements.” The IASB developed the International Financial Reporting Standards (IFRS), which is the light at the end of the tunnel that provides a globally recognized set of Standards for financial statement preparers. Consistent with the IASB’s vision, the mission of IFRS is to bring transparency, accountability, and efficiency to financial markets all over the world. Ideally, investors are enabled to make sound economic decisions from transparency, which arises from enhancing international comparability as well as the quality of information for financial statements. Extending the quality of information goes hand in hand with decreasing the information gap – in turn providing regulated accountability to investors. Bringing a uniform trusted accounting language to investors increases economic efficiency through lowering both international reporting costs and cost of capital. These accomplishments are developed and made possible from the IASB, which consists of professionals...
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...The benefits of the conversion to IFRS far outweigh the costs and therefore the US should adopt IFRS. Transitioning to IFRS will allow the US to regain strength in the global investment market as financial statements will have greater comparability and this will benefit the economy as a whole. To the investor, IFRS promise more accurate, comprehensive and timely financial statement information and its global comparability. IFRS allows small investors to compete better with professional investors. IFRS eliminate many international differences in accounting standards so that it reduces the cost and the risk to investors of processing financial information. The domestic investors should keep updating the differences between GAAP and IFRS to using IFRS numbers to make the best decision. To the U.S public companies, IFRS can enhance the liquidity of capital markets and reduce companies’ costs of capital. IFRS will have a substantial impact on the reporting quality of U.S. companies. U.S firms with operations around the world could potentially save a lot of money by avoiding the costs of translating their financial reports into several local accounting languages. On the costs side, adopting IFRS would require various upfront costs for companies. During a transition phase, companies would have to modify their accounting systems and processes as well as provide comparative financial information between their previous U.S. GAAP reports and their new IFRS-compliant reports. In addition...
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...Is the Difference in Accounting Treatment of Post-Retirement Benefits under IFRS Beneficial or Detrimental to the Financial Position of a Company Currently Reporting Under US GAAP? Megan N. Cook, CPA, CFE Accountancy 521 Professor Lawrence March 9, 2009 The first pension plan offered by an American employer was that of American Express in the year 1875. Amex’s plan did not resemble the plans that we see in today’s time; the first “modern” defined benefit plan was created in 1940 by the automotive behemoth General Motors. These plans of the past still do not resemble plans that we are familiar with today. In the past, employers could exercise a “pension put” option and, in essence, close the plan down at the current level of funding and turn the assets over to the retirees. This is not an optimal situation, as many plans at the time were severely under funded and retirees would be left with pennies on the dollar of what they were counting on for retirement. (Fortune, 2005) Post-retirement benefits are volatile on a couple of different fronts; up until the reforms in 1974 which created ERISA and the PBGC, employees had to put blind faith in their employers to secure their futures after their working years were over. (Fortune, 2005) On another front, these benefits pose a significant accounting problem – how should a company account for the costs and liabilities associated with these benefits they had to give their employees at a later and relatively indeterminable...
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...IFRS and US GAAP: similarities and differences IFRS readiness series October 2012 Table of contents The heart of the matter 2 US financial reporting will change significantly within the next several years An in-depth discussion 4 Examining the implications IFRS affects US businesses in multiple ways What this means for your business 6 Anticipate and manage the change What companies can and should do now October 2012 The heart of the matter US financial reporting will continue to change over the next several years Although US companies will not when, and how IFRS might be be permitted to use International incorporated into the US financial Financial Reporting Standards (IFRS) reporting system. for US public filings in the foreseeable • In May 2011, the SEC’s Office of future, IFRS has been affecting US the Chief Accountant published a companies for some time, primarily Staff Paper exploring one possible through engaging in cross-border method to incorporate IFRS merger-and-acquisition (M&A) into the US financial reporting activity, meeting the reporting needs system, involving an active of non-US stakeholders, and assisting Financial Accounting Standards with or monitoring of the IFRS Board (FASB) incorporating IFRS requirements of non-US subsidiaries. into US GAAP over an extended US companies are also becoming period of time (the “endorsement” increasingly aware of IFRS, as key method). Under this method, the aspects of US generally...
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...gtgifrs.com: 1 IFRS IMPLEMENTATION AND CHALLENGES IN INDIA By Vandana Saxena Poria, OBE CEO, Get Through Guides Published in MEDC Monthly Economic Digest – August 2009 issue Need for universal GAAP In recent times, capital markets have become global and continue to expand. Moreover, there has been significant globalisation of production and trade. Investors can trade shares and securities worldwide. Entities are in a position to access the funds globally in the most advantageous markets. For this, investors from all over the world rely upon financial statements before taking decisions. They need to be convinced that the financial statements are true and fair and what they understand from the statements is what the person preparing them intends to convey. However, different countries adopt different accounting treatments and disclosure patterns with respect to the same economic event. This may create confusion among the users while interpreting the financial statements. Financial statements that are based on a single, universally accepted and used GAAP will enable the world to exchange financial information in a meaningful and trustworthy manner. This will accelerate the globalisation of finance. Adoption of IFRS worldwide and in India The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. Several countries have implemented IFRS and converged their national GAAP to IFRS. More than 100 countries...
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...behaviour of investors and financial capital markets. The implementation of IFRS for financial reporting in Australia has allowed for better access to foreign capital markets and investment, eliminating barriers to cross border investing. The major benefits include the potential for lesser information asymmetry (Horton, Serafeim and Serafeim, 2012), improved reporting transparency, reduced information costs, increased comparability, accountability and increase in the quality of financial reporting (Ahmed, Neel and Wang, 2013). Therefore markets become more completive and efficient, benefiting investors. A major prospective benefit of implementation of IFRS for financial reporting is the increase in accounting comparability. The enhanced comparability is brought together though increased quality and convergence of accounting standards particularly in areas such as Fair value measurements, business combinations and revenue recognition (Jordan, 2013). The increased comparability hence allows Australian business to facilitate lower costs of capital and have better access foreign capital markets and cross-border investing. On the contrary however comparability may become worse in situations where IFRS implementation is not mandatory and countries have two varying accounting standards. Furthermore the full scope of comparability is yet to be seen as the implementation of IFRS is only been in recent. The full benefits of increased comparability is expected to be seen in the medium-long term...
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...is to view that the US GAAP should adopt IFRS. I will provide benefits and costs of the SEC's adoption of IFRS which I think will be a beneficial situation to corporations, investors and auditors. Although the SEC continue to support IFRS, it currently does not allow U.S public entities to use IFRS on our major stock exchange. The SEC has been reluctant to adopt IFRS standards for decades. The IFRS has been working with all countries to harmonize their standards. The goal is to use a single set of enforceable global accounting standards that will unify the reporting of corporations worldwide. The IFRS standards are principle based and simplified. This makes it easier to follow than that of US GAAP; therefore, IFRS is the more convenient choice and should be adopted. By adopting IFRS Corporations will be able to trade goods and services worldwide without local governmental pressure and rules. This will minimize transaction costs to US companies, which leads to lower prices, an increase in competition and highly satisfied customers. Businesses will be able to present financial statements on the same basis as their foreign competitors, which will increase comparability between the company’s financial positions. Another benefit for US Corporation doing business as many entities multinational is that it limits the reporting to IFRS, which will increase consistency and transparency in its reporting. By using IFRS to replace GAAP and IFRS, combined, however, people argue that the...
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