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An Executive Guide to IFRS: Content, Costs and Benefits to Business by Peter Walton

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CHAPTER 1

WORLDWIDE CONVERGENCE ON IFRS

This chapter is introductory in nature. It explains the origins of the use of IFRS for multinational companies and the notion of convergence. It reviews the progress of convergence and the case for and against use of a single comprehensive basis of accounting in the international capital markets.

In this century, financial reporting by large companies has undergone a transformation. In 2000 there was a picture of global diversity with each multinational mostly using the accounting rules of the country where it maintained its head office and (usually) primary stock exchange listing, with US principles dominant where a choice was available. By 2010 the world had changed to one where many of the top international companies use international rules: International Financial Reporting Standards, or IFRS.

The main aim of this book is to introduce to you the principal features of IFRS and provide some of the context to help explain the role of IFRS in the world. It will also tell you how IFRS are formulated and how you can influence that process and be part of it if you wish. The first chapter looks at the convergence process and tells you the story so far. The following section is the main technical content of the book – an analysis of the main issues under IFRS reporting. This includes a chapter devoted to the IFRS for SMES. The final section tells you about how IFRS are created and gives you some of the historical background, as well as some comments ...

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