IFRS and XBRL: How to improve Business Reporting through Technology and Object Tracking

CHAPTER ONE

The need for increased acceptance of IFRS

ONE KEY OBSTACLE IS THE PERSISTENCE of national accounting standards versus IFRS, as addressed here.

1.1 NATIONAL ACCOUNTING STANDARDS VERSUS IFRS

The role of finance and accounting professionals is critical to international business development, whether this involves importing, exporting, outsourcing, joint ventures, takeovers, start-ups or subsidiaries. The same can be said for related auditors. From the outset of any enterprise, or through subsequent and ongoing interaction with internationally located business people, the accuracy and timeliness of business reports facilitates decision making in executive offices and boardrooms. Clear communication of fundamental numbers and other information, however, can be clouded by a variety of factors that needs to be understood, and managed, in order to reduce the impact of these on profit.

Specifically, does an international entity abide by financial reporting standards that are in line with what is used in head office? We can foresee that IFRS will become the common language for finance and accounting professionals worldwide. In that regard, increasingly, we also know that IFRS is mandatory for foreign business when dealing with corporations, such as in the EU, whether for trading or investment purposes. This makes sense. For instance, there is a dire need for a prospective trader or investor to rely, with complete confidence, upon what a possible foreign supplier, business partner ...