IFRS and Accounting Essay Example | Topics and Well Written Essays - 2250 words

IFRS and Accounting - Essay Example The IFRS has in recent times been working closely with the Financial Accounting Standards Board (FASB) which is mandated with the provision of the U.S. GAAP (an equivalent of IFRS) for implementation by the U.S. Securities and Exchange Commission (SEC) among all publicly listed corporations within the U.S. to harmonize the differences existing between the IFRS and the U.S. GAAP. This is very well demonstrated in the U.S. Security and Exchange Commission (SEC) move in 2007 to a adopt a policy that would permit non-U.S corporations that are listed on the U.S stock exchange to use IFRS in their financial statements instead of the U.S. GAAP. A year later, SEC further edged towards the use of IFRS completely by issuing a road map document that highlighted the steps towards full adoption of the IFRS among publicly traded companies by the year 2014. This move is targeted at publicly traded companies and The American Institute of CPAs has responded with a call for the formation of a separate entity or committee to govern the accounting standards for private corporations. The IFRS and U.S GAAP differ significantly in so far as inventory costs are concerned. It is greatly believed that as the two accounting standards continue being harmonized prior to full adoption of IFRS by 2014, a number of inventory cost methods currently in use under GAAP will cease to be applicable in financial reporting. This will have far reaching consequences in financial accounting for numerous publicly traded companies. But as G?unther and Zoltan (2011) argue, the degree of secondary effect on management accounting will be relatively limited. In spite of this, the... This essay approves that management accounting is faced with numerous challenges in its presently uncontrolled structure unlike financial accounting which is administered under the IFRS and other local GAAPs. One notable challenge to management accounting is the subjective approach with which it is inevitably implemented. Management accounting usually involves a cost-benefit analysis whereby the aim is to have the perceived benefits exceed the implementation costs. In addition, although financial measures are typically used to inform management accounting decisions, other measures can as well be used e.g. time where money cannot be used to present events. for instance time can be used to express service quality for Amazon.com which values fast delivery of items to buyers, in airlines where timely departures and arrivals represent successful operations. This paper makes a conclusion that the introduction of IFRS regulations by the EU parliament paved way for the internalization of financial accounting. IFRS has since gained momentum and characterizes the financial accounting systems of most countries. Also plans are underway for the U.S. to drop its currently used U.S. GAAP for the IFRS by the year 2014. The report has seen how financial accounting differs with management accounting and explored the extent to which international harmonization of accounting regulations in line with IFRs has been achieved. It has also discussed some of the drawbacks inherent in the hitherto unregulated management accounting.