Custom «The Use of IFRS Making Accounting» Essay Paper Sample
The proposition to have consistency in applying accounting principles to facilitate the confidence of regulators and investors from Amsterdam, Australia and the U.S. notwithstanding where they are prepared is proper. This is indeed the genius behind the International Financial Reporting Standards (IFRS) which needs much developing to make accounting 'international.' Accounting principles resemble a complex jigsaw puzzle where countries wish to converge the IFRS although there are some missing links to the puzzle like the IFRS Convergence in the U.S. whereby a statement was issued by the U.S. Securities and Exchange Commission (SEC) about the Global Accounting Standards paving way for a 2011 decision. The U.S issuers according to this statement would report to the IFRS by 2015 although they are to provide comparative financial statements beginning 2013.
The process of convergence has been beset with delays despite efforts by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The convergence has not been realized due to delays and divergent opinions FASB and the IASB concerning overall benefit of the IFRS as well as the uncertainties over the conversion of the U.S market.
Convergence has numerous advantages notably that adopting IFRS a business can easily compare its financial statement on the same basis with foreign competitors and companies with subsidiaries in countries practicing IFRS are able to a common "accounting language company-wide." IFRS convergence difficulty are not only tied to the U.S. CPA firms should appreciate the fact that harmonization of the 27 member European Union states accounting rules is also a challenge. IFRS is only required in Europe for consolidated financial statements if a company's debts or shares are traded on a regulated market making entity level financial statement to have different accounting frameworks-French GAAP, German GAAP, and U.K. GAAP since many countries give a passive reception to the IFRS or the SMEs.
The International Accounting Standards Committee (IASC) Foundation has the objective to develop a common set of high quality, understandable, enforceable and globally accepted International Financial Reporting Standards through its standard-setting body, the IASB." Politics is however limiting the achievement of this objective. There should be pressure to maintain the momentum to realize common accounting principles while overcoming arising differences since the global economy is changing and accounting should not be rigid by remaining in the dark ages. Convergence is still a pipeline dream since the IFRS has not made accounting to be international. Real benefits to companies should however be limited by politics leaving the process like a jigsaw with many missing links.
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