Definition

International Financial Reporting Standards (IFRS) are the common accounting rules which
define how a transaction should be reported. It also includes rules about the information to
include or disclose on financial statements.

Advantages of IFRS
 It benefits the economy by increasing the growth of its international business.

 It would create a single set of accounting standards around the world.

Instead of using multiple accounting standards based on the preference of each
country where an organization does business, adopting the International Financial
Reporting Standards would enable agencies from different segments of the globe to
apply the same standards in every transaction. The advantage to find here is an
increase in transparency, which would then allow for more accessible cross-border
investments. It would decrease the cost of capital while providing higher liquidity
during each transaction.

 It would reduce the time, effort, and expense of preparing multiple reports.
The presence of International Financial Reporting Standards around the world would
allow organizations to cut down on the amount of time they spend on preparing
their financial statements. There would be fewer costs associated with this work as
well since there would no longer be multiple standards and regulations to follow
based on where the company is doing business each year. Some agencies would
immediately reduce the number of reports they produce from three to just one each
year, saving them more time, labour, and money since there is less work to do.

 It would not be a costly transition in the United States.

Although one of the disadvantages of adopting IFRS is the one-time cost that would
impact the economy, the actual expense of transitioning to this global standard is
minimal. The total cost for the entire economy of the United States would be
approximately $8 billion, which means the average one-time cost to a multinational
company would be $3.25 million. Most agencies would save a lot of money if they
adopted International Financial Reporting Standards because it would reduce the
amount of work it takes to remove errors, meet multiple regulations, and distribute
the information effectively. Over 100 countries so far have either adopted or are in
the process of adopting IFRS right now.

 It would make it easier to monitor and control subsidiaries from foreign countries.
Under the current system in the United States, agencies and their subsidiaries must
create parallel reports using GAAP and IFRS, which means there is an increased risk
of error and additional auditing requirements necessary to ensure compliance. If the
International Financial Reporting Standards were to receive adoption in the U.S.,
then it would eliminate the potential for misunderstandings. It would help
shareholders and firms to simplify their investment decisions.
 It would make it easier for all companies to do business in foreign countries.
The Internet, transportation technologies, and communication tools encourage us to
use a system of globalization today more than ever before in human history. Almost
any company has the power to expand beyond their country of origin when
providing goods and services to their customers. Having a single set of accounting
standards for every agency around the world would allow for more expansion
opportunities because there would be fewer regulations in the way. You would get
to streamline operations internally because you would have the confidence in
knowing that every other agency was behaving in the same way.

 It would improve the rates of foreign direct investment around the world.
The presence of the International Financial Reporting Standards globally would make
it easier for companies to invest in one another whenever there is a market
opportunity which presents itself. Research in the area of foreign direct investment
shows that the presence of multiple standards creates uncertainty in this monetary
transfer because of the uncertainty which exists in the differences between the
various financial standards. There may also be a lack of familiarity or understanding
with the anticipated future cash flows.

 It would be helpful to newer investors and smaller investments.

IFRS would help investors who are new to their industry to understand the
information in the financial statements because the data would be simpler and of
better quality. This advantage would allow anyone to become competitive because
there is a greater understanding of what is going on with the financial health of an
organization. This structure creates risk reduction benefits during each trade
because everyone will be working from the same understanding of each data set
instead of the multiple-tier system.