IFRS ( international financial reporting standards) Essay

IFRS ( international financial reporting standards) - Essay Example Resulting from this difference, IFRS gives the management flexibility and discretion in preparing the financial statements of a company. In the recent past, most nations have moved towards adopting a common globalized accounting standard. As such, use of IFRS in many parts of the world has gained widespread prominence and popularity. Regions such as the European Union, Australia, Hong Kong, Singapore and Russia, and other countries have adopted the use of IFRS. In January 2011, Canada adopted the use of IFRS officially; consequently, many countries switched from their accounting standards and adopted the IFRS standard of Canada. The widespread acceptance of International Financial Reporting Standards portrays a fundamental change in the accounting profession. This stems from the fact that the use of IFRS has become a common phenomenon in the accounting profession (Nandakumar et al 2011, p. 3). About 100 countries either allow or require publicly held companies to use IFRS while preparing their financial statements. The Securities and Exchange Commission (SEC) in America has considered setting a date in order to allow U.S. public companies to adopt the use of IFRS. The process of setting international standards started several decades back. Industrialized nations saw the need to devise standards, which could be adopted by small and developing nations unable to come up with their own standards for accounting. With the globalization of business, investors, regulators, auditing firms and large companies realized the vitality of adopting common standards that could apply in all aspects of financial reporting (Kirk 2008, p. 2). The adoption of IFRS has some considerable benefits to the company and the investors who adopt these standards. The adoption of international standards allows the governments, and investors and organizations to have a comparison of the financial statements