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Finance & Accounting
Pages 4 (1004 words)
Name Course Instructor Date Thought Activity My country – Indonesia has not adopted IFRS but instead has been following a process of gradual convergence to IFRS. In fact, Hans Hoogervorst (2013) points out that Indonesia’s approach to the adoption process is to maintain its national Accounting Standard – the Indonesian Financial Accounting Standards (IFAS).
The reason for opting for gradual convergence instead of adoption is that the local accounting body may want to become involved in the standard setting process. If IFRS is adopted fully then we will just have to accept what a few people have decided for us. I think we should be involved in decisions that affect us, and other countries have taken a similar approach. In fact, Ramanna and Sletten (2009) indicates that there is evidence to suggests that the more powerful countries like the US are not willing to surrender their authority to set accounting standards to an international body. However, Ramanna and Sletten (2009) found that counties are more likely to adopt IFRS when trade partners or countries within the geographical area in which they operate adopt IFRSs. This is one of the reasons for the importance of the transition to IFRS. Hoogervorst (2013) indicates that 75% of the countries in the G20 group of which Indonesia is apart use IFRS. I found out that the reactions in relation to the adoption of IFRS are mixed. There are ongoing changes to IFRS and so the gap between Indonesian Standards will widen as new changes are set for this year. ...
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