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"What were the reason for, waht are the clained advantages of, the adoption in Australia of international financial reporting standards(IFRSs)"
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This will be a more adaptive way of comparing financial information not just within Australian companies but the Australian corporate sector with the international corporations. along with comparison, it will also make the allocation of capital across borders more efficient. Furthermore, different arrays of national standards which are a lot different in their functionality, on its own places a high cost on capital markets. a constant portion of these costs is directly put on the companies who have to meet the multiple standards to raise capital in different markets. the IRFS bears the answer to provide relief for both corporate governance and the stakeholders (Antill & Lee, 2005).
In today’s global world, economic relations with other countries are increasing at a much faster rate than before and especially for Australia where foreign trade is much more than the GDP. This has resulted in a substantial increase in the number of different multinational corporations out of Australia, and many of these companies have their focus on Asian markets among others for their revenues. Furthermore, as these economies themselves develop this makes it even more relevant for IFRS to be adopted in Australia (Nobes, 2006).
In these global markets, the IFRS gives investors a more clear view of the companies as barriers to international financial investment have fallen in markets around the world. These investors can now trade securities of these Australian multinational companies without any constraints. Moreover, these investors may be pretty much responsible for trading of almost half of all the shares of the companies which are floated in the Australian market (Nobes, 2006).
As cross-border financial investment increases, capital markets become more dependent on each other. This means that shocks felt in one market reverberate around
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Businesses and organizations have gained significant benefits with the increase in globalization all over the world. Among many benefits, one key advantage associated with globalization is that it has enabled business entities to adopt accounting frameworks which are internationally accepted and recognized.
The essay discusses the challenges faced by International Accounting Standards Board in accomplishing its mission of introducing international financial reporting standards for general purpose financial statements. It further discusses about the key characteristics of International Accounting Standards Board’s framework.
The US GAAP, (Generally accepted accounting principles) is another framework which is followed in many countries. This was created before IFRS. Though the purpose of creating these two frameworks is same but there are many differences in the policies and rules in both of the framework.
Management of number and the role of International Financial Reporting Standards Many organizations are beleaguered by entropy, carrying the prevailing information of the company’s useful reports. Often, managers as well as senior personnel within an organization may lack skills and knowledge to handle and keep the company data and that why the aspect of managing numbers comes at hand.
Due to these evolving financial relations between countries, the need to establish a common, convenient and comparable standard for accounts and financial reports.
The perceived need to establish a comparable and convenient system of accounting and financial reporting, by promoting harmonisation to establish similar transactions led to the establishment of the International Accounting Standards Committee (IASC).
This Essay provides an adequate knowledge of International Accounting Standard (IAS) and General Accepted Accounting Principle (GAAP) and their comparison. Mainly we only emphasize on the 5 IAS and compare their similarities and differences with the GAAP.
Uniformity in adopting financial standards also helps in understanding the nature of business and standings in a better way. Though the international financing standards are being changed from time to time in order to make the accounting practices contemporary, yet the full version of IFRS came into being in the year 2005 when more than 8000 companies in the EU region decided to adopt these standards (Banerjee, 2008).
The IFRS uses and recommends the use of a standard set of framework, sort of a new language to communicate financial reporting, as explained by KPMG. KPMG said that IFRS “represents a complete change in the language of financial
International financial reporting standards (IFRS) refer to a set of international standards in accounting that determine how the reporting of certain transactions in the financial statements should be done (Godfrey & Chalmers 2007, p. 233). IFRS tends to be based on