International Issues in Accounting and Audit Essay

International Issues in Accounting and Audit - Essay Example Considering the growing complexity of accounting work, many countries have adopted IFRS as their basis for financial reporting as it is expected that IFRS can significantly improve the quality of information on corporate finance. Although there are numerous potential advantages associated with a common set of global reporting standards, it is difficult to implement IFRS in a way that the benefits of a harmonised reporting system could be achieved. This paper will critically explore and discuss the potential benefits as well as negative impacts/limitations of adopting the IFRS in the United Kingdom. International Financial Reporting Standards, commonly abbreviated as IFRS, are designed as a common global reporting framework for businesses so as to make company accounts well understandable and comparable despite cross-border barriers. The growing international shareholding and trade activities make it necessary to establish a common global language for business affairs with regard to accounting and reporting. Such a common global framework is also particularly important for firms that have a presence in several countries. Today the IFRSs increasingly replace different national accounting standards as multinational corporations wish to keep their accounts easily understandable and comparable across the globe. IFRS are authorised on the ground of historical cost paradigm with the exception of IAS 29 and IFRIC 7, which are authorised on the ground of constant purchasing power paradigm (Legardere, 2007). Although IFRS was initially introduced as a framework to harmonise accounting practices and procedures across the European Union, this concept has progressively become attractive around the world due to the increased value of harmonisation. IFRS are sometimes referred to as the original name of International Accounting Standards (IAS). The International Accounting Standards Committee (IASC) issued IAS over the period 1973-2001. On 1st April 2001, the new International Accounting Standards Boards (IASB) undertook the responsibility for setting international accounting standards from the IASC (Value based management.net, n.d.).