Although the US is yet to follow suit, there is a growing enthusiasm towards their adoption by the SEC. Such a move will concequently make it mandatory for the organizations to report using these standards. Currently, efforts are underway to implement the international financial reporting standards in the US accounting field. This is in appreciation of the importance of these standards in cushioning global firms in times of economic hardships. Adopting such standards will undoubtedly assist firms in reducing costs associated with financial reporting since the standards are globally acceptable. This will also enhance transparency in financial reporting as well as offer a standard comparison platform on performance. In addition, it will reduce the time taken by most multinational organizations in reporting their financials. Investors will also benefit from this development since information about performance of companies will be available to them in similar standards. This paper seeks to show how effects of globalization and increased market interdependence necessitate the need for all countries to have common reporting standards. In addition, the paper will outline the financial benefits associated with a common reporting standard in the context of international business. Reasons for the adoption of the IFRS by SEC Unification of the world reporting standards Poon (2012) observes that in 2010, the SEC took a stand on the adoption of the IFRS in the US. Citing the advantages of the use of the IFRS for the United States firms, the SEC decided to embark on a plan to ensure that all organizations in the United States adopt the IFRS. The unification of the reporting standards seeks to put the United States in the same accounting standards as the rest of the world. According to Erchinger& Melcher (2007), the world’s capital markets are likely to gain from the convergence of the world financial reporting standards. The quality applied while drafting these standards, their comprehensive nature, and the extent of their application are the main reasons why the world hopes to benefit from these standards (Erchinger& Melcher 2007). SEC in determined efforts to protect the interests of the United States investors sought to implement these standards amid stiff objections by some firms. The first attempts to reconcile the standards of the IFRS with America’s GAAPs in 2007, focused on changing the SEC’s policies so as to accommodate the adoption of the IFRS (Erchinger& Melcher, 2007). Preventing investors in economic crisis In the last decade, the American economy suffered one of the worst economic crises ever in its history. The financial sector being the worst hit sector of the economy showed the laxity of the various state agencies in implementing the policies of the country. Several financial organizations in the country were almost shut down while those that survived were faced by a myriad of problems. This crisis helped reveal a number of problems in the financial management in both the public and sector. These problems were closely
Factors Contributing to SEC Adopting International Financing Reporting Standards Name: Professor: Institution: Course: Date: Table of Contents Introduction 2 Reasons for the adoption of the IFRS by SEC 3 Unification of the world reporting standards 3 Preventing investors in economic crisis 3 Incorporation of proxy disclosure rules 4 Quality of the standards 5 Independence of the drafting body 6 Advantages of adopting the IFRS 6 Harmonization of financial reports 7 Saving time and costs in the reporting 8 Advantages of IFRS to investors 8 Research hypotheses 12 Research methodology 13 Data and Results 14 Conclusion 16 References 18 Appendices 20 Introduction In the recent past, there has been …
The International Financial Reporting Standards (IFRS) are a set of guidelines that are sued to guide accountants and financial professionals in preparation and reporting financial information. This paper will discuss the IFRS in terms of its basic information; by discussing its foundation, and how it was formed.
These adjustments have necessitated changes in several business aspects, including adjustments in financial reporting techniques by organizations. There are various corporations, which are involved in international transactions. The current international market is demanding conformity in financial reporting principles.
It has been argued by IASB that for small and medium scale enterprises, a global financial reporting standard is required, since the advantages of internationally comparable accounting standards are not only limited to the large businesses, where the equity and the debt instruments are traded in capital markets.
In our case, profit from operations before interest and tax of 1654 has overstated profits. We need to deduct interest and tax to get the real value of profit after tax and interest. An increase in inventories reduces cash balance as well as increase in trade receivables.
However, we will be focusing more on the International Financial Reporting Standards in Europe which are surveyed and controlled by the International Accounting Standards Board; if nothing but merely due to a lack of space.
in 2005, all companies, especially those listed in the London Stock Exchange are required to incorporate the International Accounting Standards in the preparation of the financial statements. The FASB and IASB study, research, and approve the conceptual framework of
ase of bankruptcy, a company may have much difficulty to access financing from the traditional sources like loans and investments because the external funding sources like banks and other financial institutions often tighten their credit facilities when providing loan to the
12 pages (3000 words)Research Paper
Get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Apply my DISCOUNT
Got a tricky question? Receive an answer from students like you!Try us!
Didn't find an essay?
Contact us via Live Chat, call us at +16312120006or send an email to email@example.com