Disadvantages Of IFRS

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Advantages and Disadvantage of the International Financial Reporting Standard Adoption The International Financial Reporting Standards (IFRS) was mandatorily implemented in Australia in January 1, 2005, comparing to the original Generally Accepted Accounting Principle, there are a lot of advantages such as better investor focus, and loss recognition timelines and reducing earning management, , but on the other hand, there are also some advantages and issues during and after the process of transition, for instance, the transitional cost and lack of detail. Based on the research done by the Yi Lin Chua (2012) the adoption of IFRS in Australia has made and improvement to accounting quality and Australian firms engage in less earnings management by way of income smoothing, better timely loss recognition, and improvement in value relevance of accounting information. Recognising the loss immediately is one of the key features of IFRS, this feature not only benefit the investors by increasing the relevance of the financial report that give both existing and potential investors a timely information for to make a more informed decision, but also benefit the lender, supplier and other stakeholders within the company. The loss recognition of the IFRS will increase the transparency, with this enhanced transparency, the contracting between the management and the companies will become more efficient. Furthermore, the enhanced transparency will also benefit the suppliers by decreasing their financial risk and ensure they know if the company is capable to repay its debt. Also a immediate loss recognition will help the management to review its book values of the assets and liability therefore make a better business operation decision. Another adva... ... middle of paper ... ...all, R. (2006). International Financial Reporting Standards (IFRS): Pros and Cons for Investors. Accounting and Business Research. Richard G. Schroeder,Myrtle W. Clark,Jack M. Cathey (2011). Financial Accounting Theory and Analysis: Text and Cases (10th ed.). UK: John Wiley and Sons. Yi Lin (Elaine) Chua, Chee Seng Cheong, and Graeme Gould (2012). The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence from Australia. Journal of International Accounting Research, 119-146. Kamran Ahmed, Manzurul Alam (2012). The Effect of IFRS Adoption on the Financial Reports of Local Government Entities. Australasian Accounting Business & Finance Journal. Richard D. Morris, Sidney J. Gray, Joanne Pickering, and Sally Aisbitt (2014). Preparers’ Perceptions of the Costs and Benefits of IFRS: Evidence from Australia’s Implementation Experience. Accounting Horizons.
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