IFRS Regulatory Framework for Financial Reporting Assignment

IFRS Regulatory Framework for Financial Reporting - Assignment Example Regulators, investors, shareholders, employees, managers and rest of the stakeholders view financial reporting as the most essential element for making financial decisions. Uniformity promoted through the IFRS, being implemented by International Accounting Standards Board (IASB), facilitates easy comparison and setting of benchmarks on an international scale. Countries have adopted the IFRS, but many find significant holdouts on its implementation. This paper is aimed at an analysis of the advantages of IFRS adoption and implementation, by highlighting the benefits to investors and managers as well as the disadvantages and weaknesses associated with the same. The debate concludes to suggest some changes that IASB can undertake in order to meet those challenges. The IFRS model, as opposed to most other accounting standards, requires extensive application of fair valuations, while measuring the assets and liabilities. The primary aim of the IFRS is to fix the Balance Sheet and put it right, which might bring about a huge precariousness in the income statement. However, as against the more popular, GAAP system of accounting, the IFRS is a principle based accounting system and not rule based. The principle based approach in maintaining accounts allows for more flexibility and discretion in maintenance of financial statements. This permits companies to choose the best way possible to reflect their accounts. Clear and defined principles make it easier to maintain accounts, rather than following rules with no supporting principle (Diffen, n.d.). IFRS adoption also facilitates making comparisons between two firms based in different countries. If the accounting standards and practices are the same, then it becomes easier for companies to undertake mergers and acquisitions. Also, use of one common accounting language is easier for companies, which have subsidiaries abroad. Companies are also able to raise capital from abroad,