Defects in Adoption IFRSs.docxVIP

Defects in Adoption IFRSs1. IntroductionThe increased globalization and integration of economic activity that have taken place in recent years indicate that the financial health of our global capital markets is heavily dependent on transparent, comparable, and consistent financial information. A single set of high-quality, globally accepted accounting standards has the potential to significantly improve financial reporting comparability among companies, irrespective of their place of domicile. This view was traditionally based on the theory that higher information quality either lowers the estimated risk of future returns [1] or that it lowers the information asymmetries between managers and outside investors, thus increasing liquidity and ultimately lowering the required rates of return, as derived by Diamond and Verrecchia[2].International Financial Reporting Standards?(IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. The enormous success of International Financial Reporting Standards (IFRS) in becoming globally accepted accounting standards leads to challenges in the future.But there are many challenges being faced in the intruding into the whole economic world as follows, which are also the viewpoint this article holds.For a financial reporting system, it is hard to be a single set of high quality, understandable, enforceable and globally accepted standards which is the stated goals of IFRS.Companies of different sizes have different financial information to be disclosed.The costs happened in transition is complicated and enormous, while the expected income, which means the expected high quality information, is not a