- How regulators ensure that firms comply with the International Financial Reporting Standards (IFRS)
The regulators ensure that organizations comply with established Financial Reporting standards by ensuring they are enforced or regulated across various regulations (Jinadu et al., 2017). Regulators often have a comprehensive knowledge on financial reporting and working relationships with issuers with various jurisdictions. Besides, regulators raise awareness support in raising awareness on the IFRS standards, materials, and resources required to support the IFRS implementation process.
The role of written rules and their implementation and enforcement
The written rules help in the implementation of IFRS because they help in bringing consistency, particularly in the accounting language, practices, and statements. Besides, the written rules are essential in implementing and enforcing IFRS standards because they help businesses and investors make appropriate financial analysis and decisions. Besides, these written rules help in bringing transparency, accountability, and efficiency to all the financial markets across the globe.
- b) Potential benefits of this widespread IFRS adoption for
- Users of financial statements (e.g., investors); The IFRS standards help users of financial statements such as investors assess the risks and returns of their investments. These provide them with a basis for making their investment decisions. In addition, IFRS standards help in fostering transparency by promoting international comparability and quality of financial information, thus enabling participants and other participants in the market in making informed economic decisions.
- preparers of financial statements (e.g., publicly listed firms);
The IFRS help preparers of financial statements in analyzing the company’s financial information. Besides, the IFRS standards help in guiding preparers of financial statements, particularly those of publicly listed firms in ensuring that they are consistent, transparent, and comparable across various parts of the world.
- Regulators of financial accounting
The IFRS standards help regulators of financial accounting in promoting confidence among the investors. For instance, regulators often use IFRS standards to help investors identify various risks and weaknesses within the financial system. It also provides them with the basis of structuring and reporting the company’s financial information (Sunder,2009).
- Auditors
The IFRS standards tend to create a common language among the investors, and this helps them to understand various transactions from one firm to another and from one nation to another. It also helps auditors in preparing transparent and reliable financial statements.
C).Four different strategies for IFRS adoption
The adoption of IFRS entails reducing the cost of accounting standards, obtaining various aids and subsidies from international corporations, and bettering financial markets and promoting economic growth. The main strategies of adopting IFRS include;
Knowledge gathering; this entails determining construction costs, borrowing, and inventories of companies. The next strategy is assessment and planning. This involves determining the costs and benefits of implementing IFRS standards in advance. The next two strategies of adopting IFR include initial transition and integration change, respectively. These two strategies involve determining the accounting policies, errors, and equipment related to the adoption of IFRS.
Integration strategy is the most considerable benefits from IFRS adoption since it sets the guidelines on how the company should implement the IFRS in its accounting activities.
- IFRS adoption benefits and costs.
The adoption of IFRS by organizations provides a wide range of benefits, including eliminating the cross-border listing barriers, easy access to global capital markets, and promoting comparability of business organization’s performance across several parts of the world.
- The costs of IFRS adoption in the above quotation refer to the differences in GAAP and IFRS across various jurisdictions. This leads to a lack of consensus in adopting accounting standards and IFRS among various countries across the globe.
The other costs of adopting IFRS include taxation effects and legal considerations. It will also lead to an increase in the actual costs of implementation, particularly among small firms and businesses (Sunder, 2009). Besides, its adoption will be susceptible to manipulation.
References
Jinadu, O., Oluwafemi, S., Soyinka, M., & Akanfe, K. (2017). Effects of International Financial Reporting Standards (IFRS) on Financial Statements Comparability of Companies. Journal of Humanities Insights, 1(01), 12-16.
Sunder, S. (2009). IFRS and the accounting consensus. Accounting Horizons, 23(1), 101-111.