IFRS Adoption: Challenges and Suggestions at ...

IFRS Adoption: Challenges and Suggestions at Global Level

Author Name : P Bala Muralidhar

ABSTRACT

The adoption of International Financial Reporting Standards (IFRSs) around the world represents perhaps the most important accounting regulatory change in recent years. The use of IFRSs as a universal financial reporting language is gaining momentum across the globe. Because more and more countries are adopting IFRS or converging their local standards with it. Although there are arguments that IFRS are extraneous to developing countries but they are adopting it because IFRS is a product with “network effects”. IFRS is apparent as a high quality accounting standard, compared to most local accounting standards. This can help to promote increased comparability of financial statements by investors. Globalization, increased border-listing, attraction of foreign investment and aids, and other institutional factors have been the motivating factors for IFRS adoption. IFRS promises a lot of benefits for financial reporting by adopters. Yet, there are many challenges and obstacles which must be overcome. Lessons from already adopters of IFRS disclose that for effective IFRS adoption, there must enabling institutional framework, accounting education and training, efficient capacity building programme to prepare the various stakeholders for the looming transition and challenges This paper tries to present the challenges and suggestions at global level for IFRS adoption.

Keywords: International Financial Reporting Standards, adoption, challenges, suggestions.