A debate has been going on about whether America should switch from Generally Accepted Accounting Principles to International Financial Reporting Standards. Many economies all over the world have switched to these standards and many more are on the verge of converting. The world is a global economy and using different standards to report can be expensive and inefficient. Today companies are competing globally. The United States would be disadvantaged if it does not consider IFRS conversion.
The advantages of converting to these new standards are more than the disadvantages. Companies will be able to provide high quality and consistent financial information. This information will make it more efficient and easier to compare different companies across the globe and also raise capital quickly. Many people claim that because there is no organization for enforcing the IFRS regulations then there is a high possibility of fraud.
This is unlike GAAP which is supervised by Security Exchange Commission. Those against conversion to the new system claim there will be uncertainty over statements of finance because there is no organization to monitor it. This is not entirely true because Internal Accounting Standards Board monitors IFRS though not as close as Security Exchange Commission does to GAAP.
Companies need to have financial statements that are both trustworthy and transparent in order to gain capital. Statements need monitoring to ensure they are free of errors and they are reliable. To do this, organizations that are able to oversee many companies must be set up. This is why a regulatory institution has been set up for the IFRS. Though at the moment there is no organization that monitors the new system closely when the new system is fully in place there will be a supervisory system to ensure that all information is validated and accurate.
One disadvantage of switching to this new system is that it requires a lot of time and resources. The cost of converting is large but it is more cost effective in the long run. It also requires time investment. This depends on the size of the company. The time taken will however pay off because the company will catch up with the economy of the globe.
Many people are willing to make the switch to the new system. One of the advantages that accountants cite is efficient reporting of finance information. Companies will be more competitive one they switch to this new standard. Money will also be saved even after the huge cost of making the conversion. Employees will be more focused because they will receive more training. This will minimize errors and thus save on auditing costs.
Comparing statements of finance will be much easier for companies, investors and the public. The consistency of the standard used to report will allow statements to be researched and compared effectively. The use of one language in accounting will help people understand financial statements easily.
Investors will be more willing to invest in companies once they realize that their statements are reliable and easy to compare with other economies. Loans will also be obtained with no difficulty from institutions. There are more advantages of IFRS conversion than the disadvantages. The world economies are becoming more and more integrated and thus a common system will make life easier.
The advantages of converting to these new standards are more than the disadvantages. Companies will be able to provide high quality and consistent financial information. This information will make it more efficient and easier to compare different companies across the globe and also raise capital quickly. Many people claim that because there is no organization for enforcing the IFRS regulations then there is a high possibility of fraud.
This is unlike GAAP which is supervised by Security Exchange Commission. Those against conversion to the new system claim there will be uncertainty over statements of finance because there is no organization to monitor it. This is not entirely true because Internal Accounting Standards Board monitors IFRS though not as close as Security Exchange Commission does to GAAP.
Companies need to have financial statements that are both trustworthy and transparent in order to gain capital. Statements need monitoring to ensure they are free of errors and they are reliable. To do this, organizations that are able to oversee many companies must be set up. This is why a regulatory institution has been set up for the IFRS. Though at the moment there is no organization that monitors the new system closely when the new system is fully in place there will be a supervisory system to ensure that all information is validated and accurate.
One disadvantage of switching to this new system is that it requires a lot of time and resources. The cost of converting is large but it is more cost effective in the long run. It also requires time investment. This depends on the size of the company. The time taken will however pay off because the company will catch up with the economy of the globe.
Many people are willing to make the switch to the new system. One of the advantages that accountants cite is efficient reporting of finance information. Companies will be more competitive one they switch to this new standard. Money will also be saved even after the huge cost of making the conversion. Employees will be more focused because they will receive more training. This will minimize errors and thus save on auditing costs.
Comparing statements of finance will be much easier for companies, investors and the public. The consistency of the standard used to report will allow statements to be researched and compared effectively. The use of one language in accounting will help people understand financial statements easily.
Investors will be more willing to invest in companies once they realize that their statements are reliable and easy to compare with other economies. Loans will also be obtained with no difficulty from institutions. There are more advantages of IFRS conversion than the disadvantages. The world economies are becoming more and more integrated and thus a common system will make life easier.
About the Author:
When people contemplate IFRS conversion, they may get answers for their decision at www.ifrs-consultants.com. Finding out what this conversion is and why they may need it can be addressed at http://www.ifrs-consultants.com.
Ditulis oleh:
Unknown - Friday, October 5, 2012
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