International Financial Reporting Standards or IFRS This refers to a set of accounting standards created and introduced by the International Accounting Standard Board or IASB (Centroid 2013). The objective is establish a single global standard for producing financial statements for all public enterprises (Centroid).

Positive and Negative Consequences of International Accounting Harmonization

The harmonization of international accounting is envisioned to enhance business decisions and to assert influence over the economic milieu (Beke 2010). When it proves workable and effective, harmonization will produce new types of analysis and data and integrate indicators, which characterize how businesses in certain countries are managed. As it is, subsidiaries of multinational companies utilize national accounting rules in converting and consolidating frameworks of unified financial statements in reporting them. The application of a precise or suitable international accounting system will be helpful to such multinational businesses in the conduct of their managerial functions globally (Beke).

Interpreting and adopting financial information through diverse accounting methods have been found to be expensive to those who use these information (Beke 2010) . A genuine and harmonized international accounting system can come up with a common business lingo by which the comparison of accounting information among different countries can become possible. This is a most sensible solution in that the differences among accounting systems incur economic costs from differences in national laws and regulations in different countries. Even expert financial analysts in the collection, measuring and transmitting business information encounter and attest to this encumbrance. It will be the critical responsibility of managers and researchers to valuate and analyze the effects of harmonizing accounting systems of different countries. Their responsibility includes determining the contribution of harmonization of information systems to globalization. Business experience attests to the reduction of disruption of information between business owners and their managers (Beke).

. Rational, Advantages and Disadvantages

The adoption of an international system of accounting information is in keeping with the accelerating and integrating character of globalization of the world economy (Beke 2010). In comparison to Generally Accepted Accounting Principles or GAAP, the advantages of IFRS are its focus on investors, elimination of recognition timeliness, comparability, standardization of accounting and financial reporting, improved consistency and transparency of reporting, greater access to investments and foreign capital markets; greater comparability of financial information with global competitors, and relevance (Jordan 2013). On the other hand, its comparative disadvantages include costs involved in applying the IFRS to multinational corporations, regulating the reporting system in all countries where IASB or IASC control is not enforceable, extraordinary loss or gain not allowed by IFRS, making the IASB a monopolist in setting the standards, the sizable amount incurred by companies in transitioning to IFRS, the time gap for the benefits from IFRS can occur, the complexity and costliness of IFRS as a whole, and the large number of listed companies that still prefer their own reporting standards (Jonas).

Advantages over GAAP

Focus on Investors -- more accurate, prompt and complete financial statement information, which is at the same time, relevant to a country's standards and in a language that is understandable to investors (Jonas 2013). Reporting is simpler and of better quality. It puts small and new investors in the same level as professional ones unlike under previous standards. Through the harmonization principle, costs of processing and interpretation are done away with for investors. And the differences in cross-border reporting standards are also reduced.

Prompt Recognition of Loss -- with this and transparency as the major feature of IFRS, contracting efficiency and manager are enhanced along with corporate governance itself. Companies are immediately compelled to recognize the loss, especially when the companies encounter economic losses at the time;

Comparability -- this is achieved by companies with the same reporting standard and under one market, which is the EU. In addition, more than 8,000 of listed companies in the EU adopted the IFRS in the same year;

Standardization of its Accounting and Financial Reporting -- this improves the comparability of financial statements it makes in major financial markets. At the same time, it eliminates the trade barrier, which was a key reason for adopting the IFRS;

Greater Consistency and Transparency -- These features undoubtedly improve investor and company relationship.

Greater Access to Investments and Foreign Capital Markets -- Not only have thousands of companies converged as a base and have adopted IFRS. Their access to financial markets is improved because financial statements are prepared according to a single set...

An even higher level of comparability and usefulness is achievable when all the countries in the world adopt the IFRS;
Relevance -- It focuses on the economic factor than the legal and thus enables companies and other stakeholders. For openly reporting on gains and losses, IFRS earns greater credibility and reliability than GAAP reporting standards. The IFRS format is more useful, consistent and less complex than that used by GAAP, which is more detailed and complex. There is reduced chance of manipulation by managers under the IFRS. And there is an eventual cost savings advantage after companies adopting IFRS first invest in transitional costs (Jonas).

Disadvantages of IFRS against GAAP Reporting Standards

Application costs -- incurred by businesses in transitioning to the IFRS reporting system. These costs accunt for the change in internal systems in making it compatible with IFRS, training and other related adjustments.

Improbability of Regulating IFRS in all Countries Adopting Them -- IASB or IASC cannot possibly enforce the application of IFRS in all countries.

Extraordinary Loss or Gain -- which is not allowed in the new IFRS is still unresolved;

IASB becomes a monopolist -- as such it will have the power to set standards. If U.S. companies adopt the IFRS, this monopolistic status will be fortified.

Transition Cost too Large for Some Companies -- This can range to more than $8 billion to a minimum of $420,000, which is too large for small and medium-sized companies;

Benefits Not Coming Soon -- It will take years for harmonization to be achieved and for financial statements to become consistent. Only then can the benefits be realized;

Costs and Complexity -- in the overall, a transition to IFRS by small and medium-sized U.S. companies can strain them.

Not Too Many Have Adopted It -- Only more than 7,000 of the more than 7 million small and medium businesses in the EU itself have applied and adopted the IFRS from 2005. This status defeats the aim and claim of the EU and the IFRS itself on the advantages of IFRS over GAAP reporting standards (Jonas).

Role of International Financial Reporting Standards (IFRS)

The first goal of IFRS is to assure that a business' first financial statement and the interim report of the period contain high-quality content that is transparent and comparable to users in the stated periods; provides an IFRS-consistent starting point for accounting; and requires costs that do not go beyond the benefits (IFRS 2015).

It is viewed as providing high-quality, reliable financial information on which capital markets thrive (IFRS 2015). Accounting is that function that provides the business owner, its investors, regulators and other stakeholders with a standardized scheme to know and evaluate the economic performance of that business or organization. Accountants or those who prepare financial statements use certain rules in preparing the business' accounts. These rules or standards insure a consistency or standardization throughout the market. This is why businesses listed in public stock exchanges are compelled by law to declare and publish their financial statements according to prevailing or accepted relevant accounting standards (IFRS).

The IFRS were developed by the IASB with the prime goal of setting standards that will be globally applicable and followed by all countries (IFRS 2015). These standards are consistent equally with developed, emerging and developing countries. Achieving this goal will provide investors and others who can benefit from financial statements with the chance to compare the financial status or performance of publicly-listed businesses. They can compare these businesses with others in the international business community (IFRS).

More than 100 countries are now said to have adopted and are mandated by the IFRS (IFRS 2015). These countries are those belonging to the European Union and more than 2/3 of the G20. The G20 and similar international groups have been in support of IASB initiatives, including that of introducing global accounting standards. The IASB is the entity of the IFRS Foundation, which developed the IFRS. The IFRS, in turn, is a public-interest organization, characterized by awarded transparency and participation by 150 London-based workers from almost 30 cuntries. IASB consists of 14 appointed members, who are supervised by 22 trustees from all over the world. They are accountable to public monitoring boards to assure their transparency and reliability (IFRS).

Impact of Not Adopting IFRS by Major Countries

While a number of countries have adopted or are adopting the new IFRS in different extents, the United States and other major countries are considering the option (Hussey 2008). For its part, the United States is mulling over rules against principles. As of November 2007, the Securities…