What Are The Disadvantages Of IFRS

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Recommended: Function and responsibilities of the international accounting standards board

Aaron Davis
Intermediate Accounting 2
Mrs. Kolar
March 9, 2014
IFRS Research Paper
International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements. IFRS demand one set of common global reporting standards to be used throughout the world. IFRS also helps reduce the cost of capital and reporting costs. An accounting standard-setting body, which was located in London, created IFRS. The International Accounting Standards Board (IASB) succeeded the International Accounting Standards Committee in 2001. The acceptance of IFRS is well known through at least 120 nations. IFRS helps company’s present financial documents on the same foundation as competitors overseas, making comparisons easier. Companies with branches in countries that require or permit IFRS may be able to use one accounting standard company-wide. Companies also may need to translate to IFRS if they are a division of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. Companies may also benefit by using IFRS if they desire to increase capital overseas. A disadvantage of using IFRS comes from individuals believe the U.S. GAAP is the highest standard, and quality will be lost if the world fully accepts it. Also, certain U.S. issuers that do not have important customers or functions outside the United States may oppose IFRS because they may not have a reason within a market to prepare IFRS financial statements. They may believe that the substantial costs correlated with adopting IFRS overshadow the benefits.
U.S. companies using IFRS will experience more e...

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...t the SEC’s decision to move forward or not. They included the accountability and funding of the International Accounting Standards Committee Foundation, the improvement in the ability to use interactive data for IFRS reporting, the education and training in the U.S. relating to IFRS, the limited early use of IFRS, beginning with filings in 2010, which would boost comparability for U.S. investors. Eligibility would be based on how much a company could use IFRS as well as how significant that company is in their given field. The SEC estimated that a minimum of 110 companies could be eligible. Also, the projected timing of future rulemaking by the Commission, and the application of the required use of IFRS, including considerations relating to whether any required use of IFRS should be shown or sequenced among groups of companies based on their market capitalization.

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