IFRS Analysis

Introduction Globalization of a reporting standard or capital market for a country or company is an irreversible process, and there are many potential benefits that will be derived from an accounting standards that are recognized and respected mutually. One of the main benefits that could be gained by adopting a uniform standard that it could help the company to cut the additional cost to be incurred in preparing the supplementary information required while doing business across borders. They make information more comparable, thereby improving the assessment and analysis by users of financial statements (Adekoya, 2011). Users of the financial information would be more assured and confident with the data and information that they are furnished

IFRS has been started to be used widely all over the world by most of the leading companies, however approximately over 100 countries have fully confirmed in adopting IFRS and the remaining confirmed to use IFRS in near future. Despite following the same steps and principles, each country had a different application experience and different consequences depending on local socio-economic factors. IFRS provides more transparency in reporting and have the potential to facilitate cross-border comparability, with this stakeholders and users of the financial results would be able to understand the financial results of entities globally. Besides this, as highlighted earlier that the adoption of IFRS could decrease the information costs, thereby increasing the liquidity, competition and efficiency in the markets (Ball, 2006). Investors may also benefit as it could lead to more-informed valuation of equity markets reducing the risk of adverse selection for the less-informed

Arguments shows that adoption of IFRS enhance the functioning of global capital markets by providing comparable and high-quality information to investors (Barth, 2008).IFRS is more accurate, comprehensive and timely financial statement information than local general accepted principles (LGAAP),particularly if the standards they replace have been influenced by national legal, political and taxation agendas (Ball, 2006). Many firms around the world have deliberately switched to IFRS even before it became mandatory, which is known as a first category of the analyzed studies identify the effects of voluntary adopt. Those firms that voluntarily adopts IFRS are those probing to get access to foreign capital, improve customer recognition or reduce political costs, firms that electing to adopt IFRS early are those with fewer reconciling