Financial Accounting: IFRS, 3rd Edition

CHAPTER 4Completing the Accounting Cycle

FEATURE STORY

Speaking the Same Language

Recent events in the global capital markets underscore the importance of financial disclosure and transparency in markets around the world. As a result, many countries are examining their accounting and financial disclosure rules. As indicated in the graphic on this page, financial regulators in over 120 countries now use the IFRSs issued by the International Accounting Standards Board (IASB).

What are the potential benefits of having countries use similar standards to prepare their financial statements? One benefit is that investors can compare the results of competing companies from different countries. A second benefit is it enhances efforts to finance growth. Companies (particularly in developing and emerging nations) need to raise funds from outside their borders. Companies that use IFRS gain credibility in the marketplace, which reduces financing costs.

Source: http://www.pwc.com/us/en/issues/ifrs-reporting/country-adoption/index.jhtml.

The IASB’s stated objectives are as follows:

• To develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) through its standard-setting body, the IASB;
• To promote the use and rigorous application of those standards;
• To take account of the financial reporting needs of emerging ...