Applying International Financial Reporting Standards to the Public Sector FAQs - Essay Example

An obvious advantage of the adoption of IFRS by US companies is the enhanced comparability of their financial statements with the financial statements of companies operating worldwide. With IFRS gaining global acceptance, users of financial statements will benefit a lot, especially those who also have interests in companies registered outside the US. FASB chairman, Robert Herz, in an interview with the Accounting and Business magazine, noted that increased comparability for investment analysis is a benefit US businesses could reap out of the switch to IFRS (Steckel 24).

Another advantage is that US companies operating in IFRS-compliant countries will no longer have to prepare two sets of financial statements. Now, financial statements prepared using IFRS will suffice both home and abroad, thus reducing the cost of reporting financial performance. According to Robert Herz, the adoption of IFRS will lead to increased competitiveness of US companies by reducing the cost incurred due to requirements to report in other accounting standards as well (Steckel 24).

Other advantages include greater access to capital markets worldwide, possibly due to legislations that require the adoption of IFRS before a company can get listed, increased portability of accounting knowledge and skills across jurisdictions, and improved transparency as a result of the preparation of financial statements that are auditable and comparable between jurisdictions (Queensland Audit Office 3).