The Extent of the Benefits of Adopting International Financial Reporting Standards - Dissertation Example

Comparing the financial statements of different reporting enterprises becomes a cumbersome task owing to the deviation in procedures along with the principles taken into account by these organizations in designing financial statements.

With the intention of making these methods and principles uniform as well as comparable to a certain extent, financial recording standards are created. Theoretically, accounting standards are termed to be the statements of policy of practice that belong to regulatory accounting bodies (Pearson Education, 2012). This policy of practice needs to be observed in the preparation as well as the presentation of the financial statements. In simple terms, accounting standards can be identified as written documents offered by the regulatory bodies within the nation or even on the international ground.

It tends to comprise numerous components such as measurement, treatment, revelation, and presentation of the accounting transactions (ICAEW, 2012). The chief objective of enforcing accounting standards is to eliminate differences in the treatment related to numerous accounting aspects and hence to initiate uniformity in the financial presentation which further facilitates an accurate and transparent disclosure of monetary facts concerning a particular business. Accounting standards also aim to harmonize the varied accounting policies which are generally followed while creating and demonstrating the financial statements by distinct financial enterprises in order to assist in proper comparison between the inter-firm and intra-firm (ICAEW, 2012).

However, on various occasions, it has been observed that companies that function in accordance with the nationally implemented strategies often have to face certain challenges when adopting internationally grounded financial standards. As noted by Brown (2011), “there will always be winners and losers from changes in accounting standards, if only because of their distributive effects, undoubtedly some consequences are regarded by companies and investors as, on balance, bene? al” (pp. 269).

Emphasizing these various aspects, the objective of the the discussion will be to critically evaluate the extent of the benefits of adopting IFRS in lieu of a country’s domestic standards in respect to the UK’s decision to adopt international financial reporting standards.