Corporate Reporting International Financial

Questions: Discuss about the Corporate Reporting for International Financial. Answers: Introduction In this study, the discussion is focused on the adaptation of International Financial Reporting Standard by the reporting entities. During the study, the costs and benefits of adopting the IFRS rules are analyzed in order to identify the effectiveness and viability of the rules in the practical context. The analysis and the discussion in the study have used some example in order to understand the usability of IFRS in a better way. The conclusion of the study is derived by considering the overall findings of the study. Critically Discussing the Costs and Benefits of Adopting IFRS by the Reporting Entities International Financial Reporting Standards include a set of rules and regulations related to the field of accounting. From 2005 onwards, the application or use of IFRS has increased and gradually it became mandatory for the business organizations in UK, US and Australia to follow the IFRS (Jain and Jain 2015). The application of accounting standards in IFRS are became mandatory because these standards help to control the financial or accounting activities of the companies. Generally, it is considered that the IFRS helps the business organizations to improve their financial operations. However, Phan, Joshi and Mascitelli (2016) stated that adapting the IFRS standards has created several problems for many business organizations. Therefore, in order to understand the actual effects of adapting the IFRS, it is very important to analyze the costs and benefits of adapting IFRS. Damak-Ayadi (2016) stated that IFRS provides more assurance regarding the accuracy and comprehensiveness of the financial statements of the companies, which are not promised by the other accounting standard like, GAAP. In support of this, Barniv and Myring (2015) mentioned that understanding the rules and regulations under the International Financial Reporting Standards is easier than the other accounting standards. The quality of the financial statements prepared under the IFRS rules is much improved (Strouhal, Pasekova and Crhova 2015). The rules and regulations stated under the IFRS helps the small investors to understand the financial statements of the large organizations easily. Pal (2015) believed that the IFRS influences the business organizations to be more transparent regarding their financial activities. After adopting the IFRS, many financial frauds have been detected by the governing authorities in the countries. For example, the corporate frauds done by Toshiba have been unfolded by the governing authority at the time of checking financial accounts of the company as per the rules and regulations in IFRS. Khan (2016) mentioned that the adaptation of IFRS has helped the investors to avoid the expense of paying extra money to the analysts of the financial statements for analyzing the financial statements of the companies before the investment. Moreover, the International Financial Reporting Standards have helped the business organizations in different countries to prepare the financial reports that are internationally accepted (Nguyen 2015). For example, the Woolworths Limited in Australia prepares the accounting statements as per the rules under IFRS. Now, if an investor in US wants to invest at Woolworths Limited then the investor can use the financial statements easily because IFRS is the common standards followed by the companies in Australia and US. Pal (2015) commented that the comparability of the financial statements has been increased due to the use of IFRS. However, Strouhal, Pasekova and Crhova (2015) argued that due to the adaptation of IFRS the differences remain in the financial reporting of the companies because the financial statements of the organization do not consider or disclose the differences that take place due to the differences between the national rules and regulations. Phan, Joshi and Mascitelli (2016) added that the interpretation of the rules and regulations under IFRS is done differently in different countries because of their past practices. This creates several problems while comparing the financial statements. On the other side, when the IFRS has been implemented by the companies by changing their current accounting standards, it costs much .high to implement the new standards (Jain and Jain 2015). At the same time, changing the internal standard of accounting requires much time, which causes unnecessary delay in preparing the financial statements. Therefore, from the above discussion and analysis, it can be said that there are several benefits as well as costs in adapting the IFRS rules and regulations. However, it can be also identified that benefits are more than the costs of adapting IFRS. At the same time, the accounting governing authorities in different countries has also made IFRS essential for the financial reporting of the companies. Barniv and Myring (2015) stated that as per the Anglo-American model, the culture of a business organization has high influence on harmonizing the accounting standards globally. However, the Continental European model believes that the accounting standards are not influenced by the culture. In the words of Strouhal, Pasekova and Crhova (2015), the accounting standards are prepared and followed by the people and as per the Hofstedes model culture influences the behavior of the people. Phan, Joshi and Mascitelli (2016) believed that the organization, where the people believe in flexible system, the accounting practices are also flexible. The standards of accounting differ as per the demand in situation. On the other side, in the organizations, where the people or the culture is to avoid uncertainties, the accounting standards support smoothing out the assets valuation and income measurement (Jain and Jain 2015). The organizations, where the culture of conservatism is followed the full disclosure of accounting standard is also maintained properly. Therefore, it can be said that the accounting standards of the business organizations are influenced by the culture. Conclusion In this study, it has been identified that the adaptation of IFRS has brought several benefits to the companies. The investors are also able to understand the accounting reports easily due to the application of International Financial Reporting Standards. However, there are several problems also and high costs and time are the two major issues. The study has also disclosed that the culture of a business organization affects the accounting standards and practices to the high extent. Reference List Barniv, R.R. and Myring, M., 2015. How would the differences between IFRS and US GAAP affect US analyst performance?.Journal of Accounting and Public Policy,34(1), pp.28-51. Damak-Ayadi, S., 2016. Tunisia. IFRS for SMEs and Tunisian Accounting. InIFRS in a Global World(pp. 405-419). Springer International Publishing. Jain, S. and Jain, V., 2015. Advantages and challenges of IFRS: a review of literature.ACADEMICIA: An International Multidisciplinary Research Journal,5(7), pp.139-147. Khan, S.A., 2016. Did Mandatory Adoption of IFRS Increase Liquidity in the Canadian Stock Markets?.Available at SSRN 2716149. Nguyen, C., 2015. Challenges in adopting International Financial Reporting Standards for banking sector in Vietnam. Pal, S., 2015. Differences Between Ind AS and IFRS: Can Full Convergence Ever Occur Between the Two?. Phan, D.H.T., Joshi, M. and Mascitelli, B., 2016. Are Vietnamese Accounting Academics and Practitioners Ready for International Financial Reporting Standards (IFRS)?.Economics and Political Implications of International Financial Reporting Standards, p.27. Strouhal, J., Pasekova, M. and Crhova, Z., 2015. Are SMEs willing to report under IFRS? Czech evidence.International Advances in Economic Research,21(2), p.237.