Essay About International Financial Reporting Standards And Central Accounting

Financial Analysis
What your view as a prospective banker, investor, analysts on International Financial Reporting Standards (IFRS)IFRS brings simplified reconciliation work for financial statistics preparers, which bring cost savings (because of central accounting). If globally implemented, it also opens the global talent pool for accounting talent for multinational companies. The fair value accounting does have some negative sides. It amplifies boom & bust cycles and overstates real-asset prices in a boom and afterwards increases the downfall as well, as seen in 08-09 crisis. However, it is more transparent, relevant and allows for better capital allocation decisions. It brings a better understanding of foreign firms. 2. The case discusses two different ways that countries move to IFRS namely adoption or convergence. What is in your view the more appropriate way for countries to move to IFRS? I would say adoption. This would be less time consuming, as stated by Mackintosh.“Convergence is [an] impossible dream. You will always find issues where you basically don’t agree and where both sides have good reasons for not agreeing. You’ve just got to make a decision. Fiddling with IFRS [locally] is not the way forward,” noted Ian Mackintosh, head of the U.K. Accounting Standards Board and an advocate of full adoption.35 Furthermore, there is a “true and fair” override allowed in IFRS, so this could be brought against the argument that accounting needs to remain flexible and adjust to the needs of a national economy, which is not in line with the one size fits all approach.3. So far the US has kept to its own set of accounting standards US GAAP. What does this mean for your view on IFRS? Should the IASB make a larger effort to get the US on board? Motivate your answer. Yes, it is crucial to get the US on board. US adoption is crucial to achieve a global accounting standard. As long as the US does not comply, other countries will have less incentive to go forward converging to IFRS.