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The Reasons for Adopting a Single Set of International Financial Accounting Standards - Essay Example

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An essay "The Reasons for Adopting a Single Set of International Financial Accounting Standards" claims that the widespread adoption of the International Financial Reporting Standards by different countries has elicited debate over underlying reasons for the global convergence towards the system…
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The Reasons for Adopting a Single Set of International Financial Accounting Standards
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"The Reasons for Adopting a Single Set of International Financial Accounting Standards"

Download file to see previous pages The preceding arguments will employ IFRS as a proxy to IAS. The structure of the paper will comprise of the discussion and the conclusion. The discussion section will critically evaluate presented reasons for the adoption of IFRS. The Key highlight of the reasons will include: IRFS advancement of timely information for investors, better quality accounting, comparability, improved earning and management, political incentives and the capital market benefits. The essay will conclude with a summary of the identified driving factors for the implementation of IAS. According to Chua and Taylor (2008), IAS highly promotes timely access to information by investors. The adoption of a single set of IAS enhances the evaluation of companies across regions by investors based on a single standardized accounting framework. IAS underpin timeliness through the standardization of accounting procedures and reporting formats thereby eliminating time lag that has traditionally emanated from the analytical adjustment of the financial statements for the purposes of international comparison. Apart from time aspect, the existences of IAS also leads to cost reduction that could have been incurred in the processing of the financial information in a manner that will allow comparison to be conducted. In light of the globalization effect, it is further imperative that the multinationals adopt a single accounting standard that reconciles financial statements globally across their entire branch network. The provision of financial statement on single IAS further underpins the significance of the value relevance for investors. According to Edwards (2009), value relevance refers to the ability of the financial information documented in the financial statement to adequately expound on the predominant parameters in the stock market. ...Download file to see next pagesRead More
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